Economic Rationality

Economics assumes rationality on the part of its subjects like consumers, producers and sellers. Rationality implies acting objectively, keeping in view the ends and means, objectives and constraints. In the decision making context a rational behavior implies the following:
First, all possible courses of action are known to you. Second, you are able to separate all such courses of action into two categories - feasible and unfeasible. Third, you are in a position to assess a particular feasible course of action out of the given set of alternatives. Fourth, you can rank the alternatives in terms of priorities. And last, you choose that course of action, which occupies the highest position, in order of priority.

Economics

Economics is the study of how economic agents or societies chose to use scarce productive resources that have alternative uses to satisfy wants which are unlimited and of varying degrees of importance.
The main concern of economics is economic problem: its identification, description, explanation and solution, if possible. The sources of any economic problem is scarcity. Scarcity of resources forces economic agents to choose among alternatives. Therefore economic problem can said to be a problem of choice and valuation of alternatives. The problem of choice arises because limited resources with alternative uses are to be utilized to satisfy unlimited wants which are of varying degrees of importance. Had the resources not been scarce there wouldn't have been any problem of choice and hence no economic problem at all. Hence the root cause of all economic problems is 'scarcity'.

Why Project Management ?

Project Management as a separate division is subject to various factors associated with the organization and the project itself.
The main factors affecting the decision as to having Project Management as a separate division are:
1) Interdependencies and Complexities - 
Interdependencies among the various departments of an organization affects this decision to a huge extent. If for successful completion of the project it is required that functionally different activities are to be carried out at one place in a certain sequence and that these activities interrelate to each other, project management techniques are certainly required.
The more the interdependencies among the various departments the more is the difficulty in pulling all the functions under on roof. In such cases project management as a separate function is called for.
2) Sharing of Resources -
When threre are certaqin resources which are very expensive or scarce to the organization and therefor to be shared by the project and line functions, Project Management techniques help in keeping such resources fully employed thereby reducing the direct as well as indirect cost associated with the activities in which the resources are used.
3) Importance of the Project - 
Importance of the project is another crucial factor that has major say in the decision. Such projects which when successfully implemented can add to the baseline of the organization are strategically important to the organization. Successful completion of these projects is very necessary and project management ensures that the same is achieved.
4) Size of the Project -
When Size of the project is substantially big, project management as a separate function should be used. Size of the project is generally measured on the basis of the amount of 3 'M's i.e. Money, Men and Machines used in the project.
5) Degree of Unfamiliarity -
When an activity which is not frequently undertaken is assigned, it creates uncertainty among the lower and middle managements and they should be told precisely what they have to do. The inability of the senior executives to do so results in uncertainty in estimates of time and costs of the project. With the help of project management such a situation can be easily avoided.
6) Reputation of the Organization - 
When possible failure of a project (either time over run or cost over run) is likely to affect the reputation of the organization or the success of a project is crucial for the Reputation Building, organization should not take chance by casual efforts on project. Also in government projects where on one hand Successful completion is rewarded with opportunity of winning more future contracts and reputation on the other hand time overruns can entail heavy penalties or even the lifelong bar on taking projects, the project should be managed by the separate project management department inter alia.

What is Project Management ?

Project Management is the discipline of planning, organizing and managing resources to bring about the successful completion of specific project goals and objectives. It is sometimes conflated with program management.
Technically program is actually a higher level construct: a group of rlated and somehow interdependent projects.
A project is a temporary endeavor, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables), undertaken to meet unique goals and objectives, usually to bring about beneficial change or added value.
Project management can be defined as planning, organization, staffing, directing and controlling some parts of the organization for a relatively short period of time to achieve the project objectives within the laid down constraints.