m16 ethics and professionalism eng 17122013 final b5 manuals/cloemc-i-iii manuals/m16... · 2019....

CONSTRUCTION MANAGERS’ LIBRARY, Leonardo da Vinci: 2011-1-PL1-LEO05-19888

PROFESSIONALISM

AND ETHICS

IN CONSTRUCTION

Christoph Motzko

Arnab Mukherjee

Aleksander Nicał

Piotr R. Nowak

Daniel Schmitz

Janusz Sobieraj

Germany, United Kingdom, Poland, 2013

This project has been funded with support from the European Commission. This publication [communication]

reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.


2


3

PROFESSIONALISM

AND ETHICS

IN CONSTRUCTION

The monograph scientifically edited by Christoph Motzko and Aleksander Nicał

Darmstadt, Ascot, Warsaw, December 2013


4

Reviewers of the monograph:

Prof. DSc. PhD. Eng. Aniela Glinicka Prof. DSc. PhD. Eng. Włodzimierz Martinek Prof. DSc. PhD. Eng. Wacław Szcześniak Prof. DSc. PhD. Eng. Artur Zbiciak Editors of the monograph: PhD. Eng. Mariola Książek, MSc. Eng. Jerzy Rosłon Cover design: PhD. Eng. Paweł Nowak © Copyright by Civil Engineering Faculty of Warsaw University of Technology, Warsaw 2013. This work, as whole or as excerpts, may not be reproduced or distributed with the use of any electronic, mechanical, copying, recording or other devices. It cannot be reproduced or distributed on the Internet without the written permission of the copyright holder. ISBN 978-83-7814-200-3 Księgarnia Internetowa Oficyny Wydawniczej PW www.wydawnictwopw.pl tel.: 22 825 75 18, 22 234 75 03, fax: 22 234 70 60, e-mail: [email protected] Oficyna Wydawnicza PW, ul. Polna 50, 00-644 Warszawa. Wydanie I. Print and cover: Drukarnia Oficyny Wydawniczej Politechniki Warszawskiej, tel.: 22 234 55 93


5

This manual is part of the Construction Managers’ Library – a set of books

related to the wide area of management in construction. The books were created

within the Leonardo da Vinci (LdV) projects No: PL/06/B/F/PP/174014; 2009-

1-PL1-LEO05-05016 and 2011-1-PL1-LEO05-19888, entitled: “COMMON

LEARNING OUTCOME FOR EUROPEAN MANAGERS

IN CONSTRUCTION, phases I, II and III – CLOEMC)”. Warsaw University

of Technology, Civil Engineering Faculty, Department of Construction

Engineering and Management was the Promoter of the Projects.

The following organisations were Partners in the CLOEMC I Project:

- Association of Building Surveyors and Construction Experts (Belgium),

- Universidad Politécnica de Valencia (Spain),

- Chartered Institute of Building Ireland (Ireland),

- Polish Association of Building Managers (Poland),

- Polish British Construction Partnership Sp. z o.o. (Poland),

- University of Salford (Great Britain),

- Chartered Institute of Building (Great Britain).

The objective of this project was to create first, seven manuals conveying

all the information necessary to develop civil engineering skills in the field

of construction management.

The following manuals have been developed in CLOEMC I (in the brackets you

will find an estimate of didactic hours necessary for mastering the contents

of a given manual):

M1: PROJECT MANAGEMENT IN CONSTRUCTION (100),

M2: HUMAN RESOURCE MANAGEMENT IN CONSTRUCTION (100),

M3: PARTNERING IN CONSTRUCTION (100),

M4: BUSINESS MANAGEMENT IN CONSTRUCTION

ENTERPRISE (100),

M5: REAL ESTATE MANAGEMENT (100),

M6: ECONOMY AND FINANCIAL MANAGEMENT

IN CONSTRUCTION (240),

M7: CONSTRUCTION MANAGEMENT (100).

The manuals created for the purposes of the library are available in three

languages: Polish, Spanish and English. The manuals may be used as didactic

materials for students of postgraduate courses and regular studies in all three

languages. Graduates from the courses will receive a certificate, which

is recognized by all organisations – members of the AEEBC, association

of construction managers from over a dozen European countries.


6

Polish representative in the AEEBC is the Polish Association of Building

Managers, in Warsaw.

Partners of the CLOEMC II project were:

- Technische Universität Darmstadt (Germany),

- Universida de do Minho (Portugal),

- Chartered Institute of Building (Great Britain),

- Association of European Building Surveyors

and Construction Experts (Belgium),

- Polish British Construction Partnership (Poland),

Within the second part of the project the following manuals were developed:

M8: RISK MANAGEMENT (130)

M9: PROCESS MANAGEMENT – LEAN CONSTRUCTION (90),

M10: COMPUTER METHODS IN CONSTRUCTION (80),

M11: PPP PROJECTS IN CONSTRUCTION (80),

M12: VALUE MANAGEMENT IN CONSTRUCTION (130),

M13: CONSTRUCTION PROJECTS – GOOD PRACTICE (80),

The manuals were prepared in four languages: Polish, Portuguese, German

and English.

Partners of the CLOEMC III project were:

- Technische Universität Darmstadt (Germany),

- Universidade do Minho (Portugal),

- Chartered Institute of Building (Great Britain),

- Thomas More Kempen University (Belgium),

- Association of European Building Surveyors

and Construction Experts (Belgium),

- Polish Association of Building Managers (Poland).

Within the third part of the project the following manuals were developed:

M14: DUE-DILIGENCE IN CONSTRUCTION (100),

M15: MOTIVATION AND PSYCHOLOGY ASPECTS IN CONSTRUCTION

INDUSTRY (100),

M16: PROFESSIONALISM AND ETHICS IN CONSTRUCTION (100),

M17: SUSTAINABILITY IN CONSTRUCTION (100),

M18: HEALTH AND SAFETY IN CONSTRUCTION (100),

M19: MANAGING BUILDING PATHOLOGY AND MAINTENANCE (100).


7

The manuals were prepared in five languages: Polish, Portuguese, German,

French and English.

The scope of knowledge presented in the manuals is necessary in activities

of managers - construction engineers, managing undertakings in the conditions

of the modern market economy. The manuals are approved by the European

AEEBC association as a basis for recognising manager qualifications. Modern

knowledge in the field of management in construction, presented

in the manuals, is one of prerequisites to obtain EurBE (European Building

Expert) cards, a professional certificate documenting the qualification level

of a construction manager in EU. The manuals are designated for managers -

construction engineers, students completing postgraduate studies “Management

in construction” and students completing construction studies. Postgraduate

studies are a recognised program, and graduates receive certificates recognised

by 17 national organisations, members of AEEBC.

More information:

- about the project: www.leonardo.il.pw.edu.pl

- about the EURBE CARD: www.aeebc.org


8

TABLE OF CONTENTS

CHAPTER 1 ..................................................................................................... 11

INTRODUCTION + LEARNING OUTCOMES .............................................. 11

(C. MOTZKO; D. SCHMITZ) 11

CHAPTER 2 18

ETHICAL PRINCIPLES IN CONSTRUCTION INDUSTRY ........................ 18

(C. MOTZKO; A. MUKHERJEE; P. R. NOWAK; D. SCHMITZ) 18

2.1 ETHICS OF CONSTRUCTION COMPANIES ...................................... 18

2.1.1 Ethics at corporate level – corporate governance .............................. 20

2.1.2 Compliance and Value Management ................................................ 22

2.1.3 Code of Conduct ............................................................................... 29

2.2 ETHICS OF CONSTRUCTION PROFESSIONALS ............................. 34

2.2.1 Standards of Behaviour – the question of morality and

professionalism .......................................................................................... 34

2.2.2 Ethics of professionals ...................................................................... 35

2.2.3 Compliance rules for professionals ................................................... 41

2.3 CORRUPTION AND ILLEGAL EMPLOYMENT

IN CONSTRUCTION .................................................................................... 44

CHAPTER 3 54

DEMANDS ON SKILLS AND COMPETENCES

IN CONSTRUCTION ........................................................................................ 54

(C. MOTZKO; A. MUKHERJEE; P. R. NOWAK; D. SCHMITZ) 54

3.1 PRINCIPLE CHARACTERISTICS

OF CONSTRUCTION PROJECTS ............................................................... 54

3.2 TYPES OF OCCUPATIONAL GROUPS IN CONSTRUCTION

INDUSTRY ................................................................................................... 55

3.3 COMPETENCES AND SKILLS OF CONSTRUCTION

PROFESSIONALS ........................................................................................ 58


9

3.4 IDENTIFICATION OF QUALIFICATION AND SKILLS

OF CONSTRUCTION PROFESSIONALS .................................................. 70

CHAPTER 4 74

HUMAN RESOURCES MANAGEMENT IN CONSTRUCTION .................. 74

(D. SCHMITZ) 74

4.1 PRINCIPLES OF HUMAN RESOURCE MANAGEMENT ................. 74

4.2 LIFELONG LEARNING IN CONSTRUCTION INDUSTRY ............... 79

4.3 PROFESSIONAL DEVELOPMENT IN CONSTRUCTION

COMPANIES................................................................................................. 83

4.4 HUMAN RESOURCES MANAGEMENT

ON CONSTRUCTION SITES ...................................................................... 91

CHAPTER 5 95

COMMUNICATION IN CONSTRUCTION .................................................... 95

(C. MOTZKO; A MUKHERJEE; P. R. NOWAK; D. SCHMITZ) 95

5.1 COMMUNICATION IN CONSTRUCTION PROCESSES ................... 95

5.1.1 Basics of communication .................................................................. 95

5.1.2 Communication at construction sites ................................................ 97

5.1.3 Conflict management ...................................................................... 102

5.2 MULTI-CULTURAL COMMUNICATION ......................................... 105

5.2.1 Impacts of globalisation on ethical behaviours:

Issues for construction industry ............................................................... 105

5.2.2 Communication in multi-cultural construction

project environment ................................................................................. 108

CHAPTER 6 117

CASE STUDIES .............................................................................................. 117

6.1 PROFESSIONAL DEVELOPMENT OF CONSTRUCTION

MANAGERS IN GERMANY ..................................................................... 117

(C. MOTZKO; D. SCHMITZ) 117

6.2 STANDARDS OF BEHAVIOUR IN BRITISH

CONSTRUCTION INDUSTRY .................................................................. 124


10

(P. R. NOWAK) 124

6.3 WHISTLEBLOWING POLICY ............................................................ 127

(P. R. NOWAK) 127

6.4 THE STANDARD OF EXCELLENCE OF A POLISH

CONSTRUCTION COMPANY .................................................................. 129

(A. NICAŁ; J. SOBIERAJ) 129

6.5 TYPICAL MISTAKES OF CONSTRUCTION

PROJECT MANAGERS ............................................................................. 134


6.5.1 Introduction ..................................................................................... 134

6.5.2 Examples of errors made by construction

project managers ...................................................................................... 134

6.5.3 Consequences of construction project

managers’ errors ....................................................................................... 140

6.5.4 Error prevention .............................................................................. 140

6.6 PARKINSON’S LAW - A SATIRE

ON BUREAUCRACY ................................................................................. 141


6.7 MURPHY’S LAWS ............................................................................... 142


REFERENCES ............................................................................................... 143


11

CHAPTER 1

INTRODUCTION + LEARNING

OUTCOMES

(C. MOTZKO; D. SCHMITZ)

Construction is an attribute of civilisational development. The term civilisation

describes the improving of living conditions by the application of scientific

and technical progress elements.1 Since the documented beginning of human

existence, architecture and construction play an important role

in the development of civilisation. For example the civil engineering, where

the road construction made it possible around 2000 BC to travel the distance

of approximately 200 km from Larsa to Babylon within two days.2 In addition,

irrigation and drainage systems (already around 7000 BC in Jericho)3 and town

and city walls (Great Wall of China, the wall of Uruk and later the border wall

of the Romans called Limes) have already been built in the early period

of our civilisation development and are proof of a planned construction.4 These

structures reveal the role of the architect and the historical development of civil

engineering:

"So war die Aufgabe des Bauingenieurs immer der Dienst für die Gesellschaft.

Seine Arbeit ist Teil der Gesellschaft und somit auch der Politik."5

(To serve to the society was always the role of a civil engineer. His work

is a part of the society, in this case as well as a part of politics).

The fulfilment of the tasks in the service to society by civil engineers should

be ethically justified. Lenk speaks in this context of a trilemma of salaried

engineers between the various codes of ethics of the society, the business

1 Hahn, V. (1996),

2 Herzog, R. (1997),, page 144.

3 Herzog, R. (1997),, page 64.

4 Herzog, R. (1997),, page 52.

5 Hahn, V. (1996),, page 7.


12

interests of the company that they represent and their own career interests.6

The engagement of the constructors and their buildings in the habitat

is immense. Both technically induced nature remuneration and the benefits

orientation are to evaluate normative and to expose the problems whether they

comply the technology inherent principle of assurance and our ideas of good

and justifiable life enforcement comply.7 For civil engineers it is important

to consider that they do not only rely on the pure execution in terms of their

responsibility. This implies that the preparation and implementation of solutions

based on applicable technical standards for the outcomes of their clients,

but always to undertake a self-critical reflection of their actions

and the consequences.

Simultaneously the scope of duties and demands on skills of civil engineers

has grown. The tasks in the construction sector have a complexity that comes

complementary with the challenges of our social development. Particular design

processes were in the past rather one-dimensional; while at present solutions

must be generated exclusively by coupling several sectoral design disciplines

and in conjunction with other participants involved in the design, construction

and operation of construction projects. It is, among other things, the efficiency

of energy consumption or to the sustainable development of urban space

and its accompanying infrastructure systems. Adequate design strategies

and instruments are necessary to solve this task in a contemporary, professional

and forward-thinking way. These extend from design, structure planning issues

up to economic, legal and environmental requirements. In the context of design,

architects and engineers have to deal with more comprehensive perspectives;

previously almost one-dimensional linear planning process with few

stakeholders has developed into a multi-dimensional integral and iterative

design process. The development of concepts and plans for sustainability-

oriented, resource-saving buildings under the use of renewable energies

and environmentally-friendly recycled and re-used building materials can not

only be done through technical approaches. The processes of design,

construction and operation have plenty of organisational, communicative, legal,

technical, social and political issues that are to be reconciled.8 In Figure 1 this

complexity is presented with the logic of the input-output relationship

of the project and object phases. Visible are the dynamic- iterative patterns both

within the phases (processes to improve the achievement levels) and between

the phases (data and information processing to improve future processes).

6 Lenk, H. (1996),, page 41.

7 Hubig, C. (2010),

8 Motzko, C., et al. (2010),


13

The lower half of the screen is devoted to the complexity of current planning

processes. Recognisable are the iterations that are necessary so that the inputs

of various design disciplines find a consideration of the overall concept.

Figure 1: Schematic process flow in the project and object phases

9

9 Motzko, C., et al. (2013),


14

In terms of professional and ethical requirements, the following features

of the professional competence in construction projects can be derived

on the basis of a comparison study related to the design processes in the time

period 1992 and 2012:10

• The project oriented way of realisation in construction industry usually

leads to an organisational separation of design works and execution

of the works with a variety of interfaces. The definition

and management of these interfaces is a big challenge.

• The environmental dimension of construction provides a high stake.

In terms of sustainability and life cycle the involved design disciplines

are equally important and to be integrated into one unite design

and construction process.

• Design processes in the construction industry are not linear. Interactions

and feedback loops are characteristic, as between the architect

and specialist engineers on the one hand, coupled with the project

management of the client and the construction companies on the other.

• Because of the unification of Europe, the technical standards

(Eurocodes) have grown tremendously. This development causes more

effort, because the project participants have to re-acquaint with

the matter. Further, there is the need to match the standard objects

to each other, to find out the differences and variances.

• In the area of law and jurisdictions occurs a proliferation of regulations

and court rulings. This has led to a tightening of the domain

and liability of the architects and engineers as well as new requirements

for the construction site organisation (e.g. obligations of the owner

and the construction manager in terms of health and safety).

The willingness to claim is steadily increasing between the project

participants. Legal advices during the design and construction processes

have become imperative.

• The electronic communication (emailing) has extremely grown

in the past 20 years. It is possible to send enormous data packets

to all stakeholders within the shortest possible time without great

expense. The simple and fast process has diminished the quality

of the correspondence and the distribution process has become

arbitrary; documents are sent without selection of project participants.

This creates additional work for the project participants.

• Compared to 1982, Project meetings, which are associated

to coordination, cause an additional expenditures in 2012. This is due

10 Motzko, C., et al. (2012),


15

to the increased number of project participants and necessary

coordination processes. On the other hand there is a converted mentality

of the client to invite all designers, and in the project all involved

parties to the project meetings, irrespective of the necessity of their

presence.

• The mental stress for the project participants has increased greatly since

1992. This is partly due to the significantly increased number

of interfaces that must be served in a project organisation. This results

in an increased density of information and data which must be filtered

and processed. There is also the expectation of the client for permanent

availability of the project members.

• The importance of efficiency has increased in almost all disciplines.

The client side demands in addition to the usual cost estimation,

detailed information on the economic impact of external factors such

as environment, energy prices, etc. An additional expense is therefore

to interpret them, but this is usually regarded as a special service

and paid separately.

• The criterion of quality management and quality assurance has won

importance for the client since 1992. Nowadays, it is necessary

to document all steps and procedures to make the planning process

for third parties transparent. This is for example a safeguard measure

against possible procedural errors.

• The progress and development of electronic media, software

and computers during the past 20 years is immense. The advantages

and the benefit resulting from technical progress are tempered

by the increasingly difficult operation of the computer programmes,

the more complex input due to the increasing complexity of the object /

structure and the increased quality demands of the clients.

• Another key feature of the changing demands on the civil engineers

and architects is the globalisation. In the past, the construction business

was characterised by local or regional projects. Currently, the share

of construction volumes delivered abroad is significant, as shown below

in Table 1.


16

Table 1: International turnover of construction companies in 201111

11 Cialdini, 1999


17

Learning Outcomes

The reader will gain basic knowledge of ethical principles and professional

standards in construction and in this way develop a sense of sociological

and psychological processes in construction industry. The aim is to develop

sensitivity for thoughts and reflection on human actions in construction projects.

Furthermore the reader will gain which qualifications will be needed

in the future in order to realise successful construction projects. The necessary

skills, abilities and competencies are identified, analysed and evaluated.

The reader will gain an insight into activities connected with the area of HR.

Furthermore, to obtain recommendations for education and training related

to HR for construction managers.

In construction projects different cultures meets. The reader will gain an insight

into the techniques of communication processes, especially into the subject

of intercultural communication.


18

CHAPTER 2

ETHICAL PRINCIPLES

IN CONSTRUCTION INDUSTRY

(C. MOTZKO; A. MUKHERJEE;

P. R. NOWAK; D. SCHMITZ)

2.1 ETHICS OF CONSTRUCTION

COMPANIES

Ethical principles in construction industry

Ethical principles refer to a set of values that set the standard or structure

of what is morally right. Setting aside the philosophical debates surrounding

ethics and ethical behaviours, and ignoring the cultural and contextual issues

influencing ethics, there have been several studies and researches12

which

sought to put forward business cases for sustaining ethical principles

in construction industry. Below the example of the UK will be presented.

For different countries of the European Union, there are different rules, which

should be followed.

Ethics of construction companies

In terms of individual professions, it is often assumed that architects are not

only talented in the design and construction of buildings, but also of the highest

ethical calibre (Abramowitz, 1998:p3; Pressman, 1997:p46). Pressman

(1997:p51, for example, has traced this back to the American Institute

of Architects Code of Ethics set in 1947. The current code of ethics revolves

around the concept of "the common good is right” for matters not based on laws

(Pressman, 1997:p52). Similarly, the Royal Australian Institute of Architects

12Constructing Excellence 2004, Bowen et al 2007; Fox 2000; Liu et al 2004; Poon

2004; Sassi 2004; Suen et al 2007; CIOB 2007


19

(2001, http://www.raia.com.au/html/coc), Code of Professional Conduct,

comprises Principles, Rules and Notes. Architects have been found wanting

at times, however, a recent poll on ethics in architecture carried out by the

magazine Progressive Architecture, 1987 (cited in Pressman, 1997:p53) citing

the main types of unethical behaviour in architecture to be:

• Concealing of construction errors and stealing someone else’s drawing

• Exaggerating experience and academic achievements in resumes

and applications for commissions

• Charging clients for work not done, costs not incurred or overstated

• False promises of advancement as practiced by some architects

• Misleading clients in project management

• Involvement in conflict of interest

For project managers, one of the critical elements of their profession

is the consideration of ethics and social responsibility (Fryer, 1997:p13). There

should be no conflict between morality and good management (Willouby,

1994:p56). “... it is vital that project managers conduct their work in an ethical

manner ... ". This quotation, from the Preamble of the Code of Ethics

for Project Managers (Walker, 1989), confirms the scope of proper ethical

conduct required by project managers.

Construction contractors are also expected to behave in an ethical manner.

A recent interview survey of construction professionals indicated the significant

role ethical conduct plays in construction contracting (Badger and Gay, 1996),

an unsurprising fact considering that people working in the construction

industry are twice as likely to sustain a major injury and five times more likely

to be killed, than the average for all industries (Davis, 2001). Being honest

and realistic is also said to be a fundamental aspect of professional integrity,

especially when making claims and estimates (Johnson, 1991:p114). In contrast

with architects, however, construction contractors have a reputation

for unethical behaviour, the main problem being, according to a poll conducted

by the journal Building Research and Information (Pilvang and Sutherland,

1998), the high level of disputes between proprietors and builders. Their

generally poor behaviour has been said to have originated from the influx

of new construction companies with new people who lack building construction

ethics, with greed being one of the main factors leading to unethical conduct

(Ritchey, 1990). In response, there have been calls from the contracting

community itself to “get rid of those within our midst who do not do the right

thing” (Master Builder, 1997:p25). There have also been moves to greater self-

regulation.


20

United Kingdom contractors have introduced a consumer driven initiative called

‘ Quality Mark’ with the objective of distinguishing between the ‘rogue’

builders and the reputable organisations, as indicated in The Magazine

of the Federation of Master Builders (Butt, 2001). The Bureau of Business

and Economic Research has described a similar initiative in the USA, to curb

unethical conduct by contractors, which is called the Associated General

Contractors / American Subcontractors Association (AGC /ASA) whose

objective is to address different problems in the construction industry.

2.1.1 Ethics at corporate level – corporate governance

Ethics generally constitute“1. a system of moral principles, by which human

actions and proposals may be judged good or bad, or right or wrong.

2. the rules of conduct recognised in respect of a particular class of human

actions. 3. moral principles, as of an individual” (Delbridge et al, 2000). They

evolved initially from religion by many thinkers in the Judeo-Christian tradition

(Cohen & Grace, 1998:p9). Their study involves the activity of examining one's

moral standards of society and asking how these standards apply to our lives

and whether these standards are reasonable or unreasonable (Velasquez,

1998.p13). The outcome is the notion of rights as doing what will promote

the most good, and acts that promote the general good are one of the factors that

determine whether they are right (Ross, cited in Pressman, 1997:p48).

However, ethics cannot be arbitrarily created but discovered through argument

and persuasion (Johnson, 1991). Until relatively recently, it was thought that

business and ethics should not be mixed (Velasquez, 1998: p35-p38). Indeed,

the mere term "business ethics" has been called as an oxymoron (Carlin, cited

Ferguson, 1994:p1). It is now recognised, however, that the general concepts

of ethics are applicable in business (Fleddermann, 1999:p4) on the grounds that

business exists not solely to suit certain individuals, but because it serves

society and meets collective and individual needs (Cohen & Grace, 1998: p22)

and the environment in general (Fleddermann, 1999:p82). Unethical conduct,

it is said, does not eventuate from a person’s upbringing, but rather it is part

of the process of learning practical business or being inducted into the practice

(Sutherland, 1983:p245). The reality is, however, that little training is provided

to employees in the general workplace, where a survey by KPMG Forensic

Accounting (Weait, 2001) has shown dishonest and unfair conduct to be

"endemic". One of the most frequently reported unethical practices in business

is bribery, described as: “the offering of some good, service or money

to an appropriate person for the purpose of securing a privileged and

favourable consideration (or purchase) of one’s product or corporate project”


21

(Almeder and Humber, 1983, cited in Johnson, 1991:p327). Similarly, bribes

are the offering of payments or inducements to someone in a position of trust

to get them to do something for the bribe payer to which the bribe payer is not

entitled (Whitbeck, 1998:39). As with most activities with an ethical content,

“grey areas” exist. These are between the delineation of actions that are termed

“gift giving” and what can be defined as bribery in legal terms (Fleddermann,

1999:p55; Almeder and Humber, 1983, cited in Johnson 1991:p327). This

situation is compromised when meals or gifts are no longer of low cost and the

expenses of these items are not shared equally, the possibility of abuse becomes

large (Turow, 1985). According to Johnson (1991), the following two actions

have to be satisfied to transform gift giving to the illegal practice of bribery:

1. The person receiving the gift may, consciously or otherwise, be disposed,

predictably, to favour the interests of the gift giver

2. The gift must be of a non-token nature that it is reasonable to think that

it may put the interests of the giver in a privileged status even when all else

is equal.

Consequently, some corporations have allowed gift giving to their clients

or potential clients as long as these two conditions do not apply. Other

frequently reported unethical practices are related to fraud, breach of confidence

and negligence. Deceit, trickery, sharp practice, or breach of confidence,

by which it is sought to gain some unfair or dishonest advantage, is the

description of the unethical practice of fraud (Bolgna et al, 1996:p9).

The advent of accountability in the construction industry may also increase

the likelihood of accounting system generated fraud such as false expense

reports, false suppliers invoices and other alteration of accounts (Bolgna et al,

1996:p9). The importance of confidentiality is crucial to how an organisation

competes in the market place (Fleddermann, 1999:p80). A common breach

of confidentiality is whistle blowing, described as the act of an employee

of informing the public or higher management of unethical or illegal behaviour

by an employer or supervisor (Johnson, 1991:32). According to Harris et al

1995), whistle blowing is not always appropriate and should only be attempted

when the four basic requirements of need, proximity, capability and last resort

option, are satisfied. Fleddermann, (1999:p81), however mentions that a ‘grey

area’ exists over the length of time an employee should withhold confidential

information and where discontinued employment exists. Negligence is the

“failure to exercise that degree of care which, in the circumstances, the law

requires for the protection of those interests of other persons which may

be injuriously affected by the want of such care”. (Delbridge et al, 2000).

The main sources are design negligence, design defect, production defect

or a combination of these factors (Thorpe and Middendorf, 1980:p75).


22

Negligence as it relates to the construction industry may be ambiguous,

however (Pressman, 1997:p284), and the courts recognise this disparity

and judge negligence in the construction industry on the basis of professional

judgement rather than craft (Pressman, 1997:p85).

2.1.2 Compliance and Value Management

Basics

Compliance means the adherence to different legal system rules, professional

regulations and codes as well as to the companies’ individual standards

in business operations. The examples are:

• Compliance with the local and the international law and regulations.

• Fair treatment of business partners, suppliers, customers, employees

and colleagues.

• Establishment of a compliance organisation that is available

to employees as preventive advisory capacity.

• Training of employees through the compliance organisation

to recognize, how to deal with ethical issues.

• Dealing with company property.

• Establish the principles for health and safety as well

as for environmental protection in the company.

The construction industry is faced with different problems in this area.

Environmental impact, accounting rules and corruption scandals, exploitation

in third world countries, bonus payments for managers to mismanagement, mass

layoffs etc. led to a critical examination of the social, environmental

and economic responsibility of companies and their managers, as well

as to a growing interest in corporate ethics principles.13

In the construction

sector, in particular the following crimes or offenses are relevant:14

• Criminal offenses and misdemeanours for anti-competitive collusion

in bidding

• Corruption offenses

• Fraud

• Infidelity on anti-competitive agreements and execution of construction

projects

13 Polzin, B.; Weigl, H. (2009),, page 173.

14 Filippi, R. (2010),, page 389.


23

• Criminal offenses and misdemeanours for illegal temporary workers

• Criminal offenses and misdemeanours for illegal employment

of foreigners

• Wage usury

• Withholding of social security contributions

• Tax evasion

• Insolvency offenses

• Criminal offenses and administrative offenses in the area of building-

related environmental laws

Discussions on the compatibility of business and morality with value-based

behaviour and economic activity show why the importance of compliance

strategies and value management systems continues to grow. In addition,

the increasing internationalisation of business activities leads to an increased

awareness of the participants in this field.

The primary goal of entrepreneurial activities is to achieve sustainable

economic success and profit. To achieve this goal, business decisions are not

just to benefit only the management and the owners. In terms of a normative

stakeholder management, the different and sometimes competing interests

of all stakeholders are considered. Stakeholders are affected by several

corporate decisions such as clients, employees and suppliers (see Figure 2).

There are also ethical and moral aspects, in particular the social responsibility

to consider and it is necessary to take into account that ethics and economic

activity are in a mutually influential relationship with each other.15



24

Figure 2: Network of mutual interests of project partners

16

The need for a compliance management system respectively values

management system obtained from the principle of subsidiarity

of the companies. There is a growing trend, that the regulatory framework

is becoming increasingly complicated and perhaps confusing, making

the distinction between legally permissible and impermissible actions more

difficult. Especially for the employees of companies it is often complicated

to understand the legal system and to align their actions accordingly.

In addition, in complex economic relations as they occur in common

construction projects, closed contracts are often incomplete because the variety

of contractual scope of works cannot be fully grasped in advance. By including

such an incomplete contract with a company which is subject to a value

management system, one can assume that the risk from being exploited is very

low and possibilities for a fair outcome, where the interests of both sides

are considered, when a solution will be looked for, to be present.17

Relationship between compliance management and value management

Compliance can be defined as all measures be taken to ensure the correct

conduct of a company, its officers and employees, taking into account all legal


17 Weidinger, R. (2012),, page 20.


25

rules and company's do’s and don'ts. Compliance refers to any company

regardless of its size or the international orientation.18

At this point it comes

to compliance with all normative requirements of a company, irrespective

of the question whether a default results from mandatory law or a voluntary

agreement. At the moment there is no German law to introduce a compliance

strategy in a company.19

An ethical and value-based management takes into account the legality

and conformity compliance and also values that determine economic behaviour.

It implies the relationship between entrepreneurial profit, ethical ideals

and moral action.20

Its values determine the identity and spirit of each action.

They determine the actions and provide guidance for the conduct of daily

business. Organisation and culture of the company promote respect

for the corporate life. The values can contribute to solve conflict situations,

particularly in formal non-regulated areas.21

In order to effectively and efficiently integrate a value management system

in a company, it is necessary to integrate different modules in this. These

include:,

• Code of Ethics

• a behaviour guideline (Code of Conduct)

• their operation in transparent guidelines and procedures

• ensuring transparency in business processes,

• a living leadership and corporate culture,

• clear and consistent communication,

• Risk and hierarchy-specific training,

• Compliance measures in personnel management,

• appropriate organisation,

• Internal audit and external monitoring.22

Compliance management systems are often implemented if an audit is instigated

by the Compliance Office. They put the emphasis on standards, documentation

and testing of these standards. They are mainly targeted to discharge

18 Rohr-Suchalla, K. (2011),, page 12.

19 Hess, G. (2009),, page 140.


21 Weidinger, R. (2012),, page 20.

22 Wieland, J.; Grüninger, S. (2010),, page 129 ff.


26

the corporate bodies. It includes "legal compliance" and can be considered

"as a compliance audit".23

A value management system focuses on value-oriented standards of conduct,

management culture, communication, documentation, and in this context then

controls and audit. In this approach, "Compliance as a management task",

the management of values is in focus, so that compliance in the narrower sense

is the core of a comprehensive value management.24

The following subchapter

will report a case study about the implementation of a Value Management

System in the Bavarian Construction Industry. Value Management is also

subject of the Manual M12.

EMB25

Value Management Construction

One possible approach of a value-based management system in the construction

industry is the by the Bavarian Construction Industry Association initiated EMB

Value Management Construction. The objective of this system is that

the company or the industry as a whole can create the action relations so that

the individual can practice law enforcement, integrity, fairness and transparency

without drawbacks. It includes the implementation of valued-based business

processes, which covers all aspects of the company and is driven mainly

by a strong corporate culture.26

The EMB Value Management Construction consists of four compulsory

elements.27

1. Codification (Code of Ethics)

The definition of the basic values of a company in a code of ethics

or in a mission statement forms the central component of the value

management system. The core values statement has the task of laying

down the cornerstone from which a company can conduct in its

business practices to customers, partners, employees and the public.

2. Implementation (Code of Conduct)

The development, formulation and implementation of company-specific

standards of behaviour are crucial processes in the practical

23 Hess, G. (2009),, page 144.

24 Hess, G. (2009),, page 144.

25 EMB-Wertemanagement e.V.

26 EMB-Wertemanagement Bau e.V. (2007),, page 4 f.

27 EMB-Wertemanagement Bau e.V. (2007),, page 11 f.


27

implementation of a value management system. These standards

of conduct include among other things reliability and integrity

of the areas of law, rejection of restrictive agreements, dealing with

clients, subcontractors, suppliers and other stakeholders.

The specification is done either for a specific area of action

(e.g. the handling of gifts) or for a specific target group, such

as managers (management standards). At this point the executives take

a special role because they have the task to exemplify these standards

and to communicate them. Through training, it is important to inform

the employees about the content and consequences of the value

management system. The formal integration of the code of conduct

is another important tool in the practical implementation.

3. Control (internal and external audit)

A company's internal control to verify that code of conduct

is implemented as part of a corporate culture is essential. Furthermore,

an external audit is necessary to ensure the sincerity and trustworthiness

of the system. Only then the quest for integrity, fairness

and transparency will be detectable and easily communicated

to the environment.

4. Organisation

For the successful implementation of the system the responsibility

of management is essential. A member of the directors’ board should

formally fulfil the function as a leader of the value management

and should act as a model. This person is responsible for the strategic

integration, its operational implementation by the responsible employee

and the solution of associated conflicts. The necessary human

and material resources for the successful implementation of the value

management system are guaranteed by the company's management.

Numerous positive effects can be generated within the company through

the implementation of the EMB Value Management Construction. The value

management can be used for signalling and documentation of fair behaviour

towards partners and employees. Through the establishment of the value

programme the reputation as a trustworthy and fair partner can be protected

and it is possible to consolidate the position in the market.28

Surveys of audited

companies have shown that particular communication, leadership, information

openness, independent perception of responsibilities and legal security both

28 Hess, G. (2009),, page 143 f.


28

internally as well as externally have strengthened or improved. In the area

of public contracting prequalification benefits may arise.29

Other benefits

of a value-based management system are shown in Table 2.

Table 2: Entrepreneurial benefits through value management30

For the successful establishment of a value-based management system the full

involvement of all stakeholders and especially of its own employees is essential.

As noted in chapter 2.2.1, values or compliance cannot be arranged. They must

be internalised by the parties as a binding unifying and promising elements

in daily business activities. The codified corporate culture serves as guidance

to employees, such as dealing with those involved in construction projects

should be done. The value management is to grant freedom within a framework

largely self-determined order. The individuality and uniqueness

of the employees can unfold in certain, all known and accepted rules.

This provides security and means reliability, but also introduces an obligation

for the employee with it.

29 EMB-Wertemanagement Bau e.V. (2007),, page 12.

30 Kohlschmidt (2007),, page 138.


29

2.1.3 Code of Conduct

There are conflicting opinions as to whether or not the adoption of a code

for ethical behaviour results in improved ethical conduct. For example,

Maitland (1985) states that self-regulatory actions such as the development

of ethical codes represent honest attempts to proclaim corporate social

responsibility. In this sense, the corporate ethical values embodied in the code

provide a foundation for the ethical climate in that organisation. Others,

(e.g. Bowie, 1982; Starr, 1983), however, suggest that codes of ethics can never

be little more than “window dressing” and thus self-serving as simply public

relations efforts.

Within the construction sector, contractors have most commonly been the focus

of studies into unethical practices (Vee and Skitmore, 2003). However, other

construction professionals have also been involved in instances of unethical

behaviour (Fan et al., 2001). Such professional deficiencies have greatly

tarnished the image of professional participants in an industry whose

professional bodies proclaim that they serve the interests of both clients

and the general public.

The studies described in the last section demonstrate that a code alone does not

necessarily ensure that professionals will behave ethically on a day-to-day basis.

This is particularly true at the contractor/sub- contractor level. The temptation

for contractors and others in the industry to be unethical can be seen

to be almost irresistible when they get caught in a compromising situation.

Whether this behaviour is labelled as cutting corners or applying leverage

to the supply chain, the potential for unethical behaviour is massive. This point

is made by Neill Stansbury, Chairman of Transparency International (UK)

“The majority of contractors who do engage in corrupt practices tend to do so

not because they want to, but because they feel they are forced to by the way

the industry and the political environment operate.”(Stansbury, 2005) What then

can a single code offer? Professor Uff has been one of the leading lights in the

creation of the code and describes it as “the first line of defence against

corruption” (Uff, 2003). Another heavily involved in the drafting of the code

was His Honour Judge Thornton for whom the benefit of the code was that

“there would be an appreciable reduction in poor designs, shoddy workmanship,

delays, claims, excessive charging, cost overruns and disputed claims

(Thornton, 2004).” Both writers seemed to appreciate that the task they set

themselves was not an easy one. His Honour Judge Thornton described the task

of creating the code as “bold, difficult and somewhat presumptuous” as well

as “brave, pioneering and highly desirable.” The Society for Construction Law


30

set up a group in 2003 to consider the question of ethics in the construction

industry. In doing so the society, consistent with its objective ‘to promote

the study and understanding of construction law’, aimed to stimulate discussion

and debate and increase awareness and understanding of ethical matters.

In addition the Society set itself the objectives to inform and guide (that

is, influence) construction law professionals, and provide a standard against

which others may review compliance.

The Statement of Ethical Principles

Ethical conduct is the compliance with the following ethical principles:

1. Honesty - act with honesty and avoid conduct likely to result, directly

or indirectly, in the deception of others.

2. Fairness - do not seek to obtain a benefit which arises directly or

indirectly from the unfair treatment of other people.

3. Fair reward - avoid acts which are likely to result in another party being

deprived of a fair reward for their work.

4. Reliability - maintain up to date skills and provide services only within

your area of competence.

5. Integrity - have regard for the interests of the public, particularly people

who will make use of or obtain an interest in the project in the future.

6. Objectivity - identify any potential conflicts of interest and disclose the

conflict to any person who would be adversely affected by it.

7. Accountability - provide information and warning of matters within

your knowledge which are of potential detriment to others who may be

adversely affected by them.

Warning must be given in sufficient time to allow the taking of effective action

to avoid detriment. These principles were written to apply to the work

of all professionals working in the construction industry, whatever their original

qualification or affiliation and to individuals, whether they work for or on

behalf of an independent professional or as a partner, associate, director

or employee of a firm or company. It was intended that the statement of good

practice is in addition to any other professional code that may apply. Further,

the statement of good practice was seen as part of, and additional to, contractual

and other duties taken on under the civil law and potential breaches of the

criminal law. The Code identified unethical conduct as deliberate or reckless

disregard for the ethical principles, as they would apply to the ordinary

standards applicable to the activity being undertaken by reference to the

recognised practice in that profession.


31

The Terms of the Code

His Honour Judge Thornton identified that help was at hand in drafting the code

in the form of the Seven Principles of Public Life identified by the Nolan

Committee set up in 1994. These principles set out the bench mark

of acceptable behaviour in the public sector. The principles were amended

for the purposes of the Code on the basis of construction being a commercial

activity and were regrouped as follows: fair reward (instead of selflessness)

fairness (instead of openness) reliability (instead of leadership), integrity,

objectivity, accountability and honesty. For the code to be useful as a first line

of defence then its practical applicability to the industry needs to be considered.

The seven qualities with examples of the type of conduct they seek to render

unethical and guidance offered on how to set the appropriate ethical

standard are discussed here.

Honesty

It comes as no surprise to see honesty at the top of the statement of ethical

principles. As the international studies demonstrated, the industry has a very

poor record and reputation in this regard. Examples of dishonest behaviour

are given as bribery, claims fraud, collusive tendering, kickbacks and the

preparation of forged documents to support claims. The problems of the almost

endless possibilities for dishonest behaviour are exacerbated by the high

possibility of getting away with it. The guidance suggested by the code is for

the appropriate behaviour on discovering corrupt practices would be for the

recipient to report the matter to the appropriate criminal investigating bodies

and professional and trade associations. Clearly, taking such a step would

be unpalatable for those not wishing to jeopardise their positions within

organisations where a culture of non-observance of ethical considerations exists.

Fairness This is an area where the ethical statement departs from the standard legal

obligations seen in the English law tradition. This tradition is comfortable with

notions of reasonableness but not relatively unfamiliar with the notion

of fairness. Guidance on what constitutes fairness in the myriad of situations

in which it could be called into question is something the code’s authors aim

to produce over time. The establishment of a duty of good faith in English law

would go a long way towards fulfilling this brief.

Fair reward A major obstacle to achieving this ethical goal is the complexity of the

industry’s payment provisions and their ready facility for price alteration.


32

The practices such as interim payments, the valuation of variations

and incomplete and undefined scope of works and quantities open the way

for unethical conduct before, during and after the work is performed. Specific

examples of unethical conduct in this regard include devising tenders with

inadequate definitions of work scope and risk allocation. The interim claims

and valuations are often paid late at each layer of the supply chain and are

subject to unfair cross claims. The authors of the code envisage giving guidance

to identify what information should ordinarily be provided with regards to risk

allocation, scope of work, rate and valuation breakdown and claims details.

Reliability This ethical principle can be simply put as having the ability to do the work one

is hired for and to have the skills to which one professes. The guidance

to be made available on this principle would set out how, in what circumstances

and with what degree of detail a construction professional can be described.

The difficulty of this task is not made any easier by the blurring of distinctions

between the professions and the prevalence of multidisciplinary practices.

Integrity

This principle embodies a sentiment expressed earlier in the paper

in recognising the overall objective of construction being the production of safe,

reliable, useable and affordable construction. This is only achievable

if the professionals concerned can look beyond their own or their client’s

narrow agenda.

His Honour Judge Thornton identifies that the heart of this issue is risk

identification, management and assessment. He cites late or non-disclosure

of information (including design information) to tenderers as examples of bad

practice. The suggestion is that the code could identify general principles that

should govern a tender draftsman, tenderer, designer, specifier, claims

draftsman and claims evaluator in their tasks or risk identification

and assessment.

Objectivity Closely linked to the subject of integrity is the requirement for objectivity and

the ability to avoid situations in which conflicts of interest may occur. The legal

profession has long been aware of the dangers of conflicting interests on behalf

of the clients for whom they act. Other professions have not been so active

in recognising the potential for unethical behaviour in this area. The key to this

is identifying where individuals are putting themselves in potentially

compromising situations and to seek to avoid the damage, real or apparent, that


33

might be done by the situation. The guidance given in this connection is that

rather than avoiding these situations altogether, the simple raising of concerns

between the project team might be enough to instil this ethical principle.

The guidance to the code should attempt to address conflicts of interest at each

stage of the process from first inception to the final award of an arbitrator,

principally by conducting a conflict review.

Accountability

This ethical principle is linked to objectivity and integrity in that it deals with

going further than the remit of your particular role to deliver what is required

and the need on occasion to provide a warning or information. Again this

is a difficult area in so far as English law is concerned as no general duty to

warn exists. The mischief that this statement is designed to avoid is the

propensity for professionals to err on the side of caution and distrust their

dealings with one another. In the guidance to the code it should be possible

to produce a list of principles which identify when and how the scope

of a professional’s duty should be spelt out. A clear message from the judiciary

on the circumstances in which a legal duty to warn will be upheld would aid

clarity. In the writer’s view the Statement of Ethical Principles has a good deal

to commend it. It is comprehensive, concise and of universal applicability to the

industry it seeks to ethically improve. The benefits of replacing existing ethical

codes with the single statement are selfevident. Adoption and promotion of the

code would alter the perception of ethics from being a private matter with loose

references to one of many professional codes to a single readily identifiable

source. The Society of Construction Law has stated its willingness to work

in conjunction with professional bodies and others in the industry are pursuing

allied initiatives. Work is currently ongoing to produce the guidance notes and

examples of ethical conduct mentioned above. Tellingly, the Society did not

feel able to take on a role of the regulation or the imposition of sanctions

for breach of the ethical code. The justification for this was that a significant

change would be needed to the constitution of the Society. Rather than

an enforcement role, His Honour Judge Thornton proposed that the relevant

parts could be incorporated into rules of conduct of the professional bodies, into

Standard Methods of Measurement and standard forms of contract. This

approach has much to commend it in terms of the Statement becoming a seal

of ethical approval whereby the signatories to these documents incorporating

the statement achieve an ethical accreditation. Whilst it makes sense to promote

the statement and compliance with it in this manner with the question remains

as to whether or not it will make a difference or become “window dressing”

as has been the experience with other ethical codes.


34

2.2 ETHICS OF CONSTRUCTION

PROFESSIONALS

2.2.1 Standards of Behaviour – the question of morality

and professionalism

A Template Code of Conduct for a Construction Manager based on Professional

Ethics

As a professional engaged in the business of providing construction

management services, and as a member of the CM profession, I agree

to conduct myself in my business in accordance with the following:

1. Client Service. I will serve my clients with honesty, integrity,

competence, and objectivity, establishing a relationship of trust and

confidence and furnishing my best skills and judgment consistent with

the interests of my client.

2. Representation of Qualifications. I will only accept assignments for

which I am qualified by my education, training, professional experience

and technical competence, and I will assign staff to projects

in accordance with their qualifications and commensurate with the

services to be provided.

3. Standards of Practice. I will furnish my services in a manner consistent

with the established and accepted standards of the profession and with

the laws and regulations which govern its practice.

4. Fair Competition. I will build my professional reputation on the basis

of my direct experience and service provided, and I will compete fairly

and respectfully with my professional colleagues.

5. Conflicts of Interest. I will seek to avoid any and all conflicts of interest

and will immediately acknowledge any influences and offer

to withdraw from any assignment when any actual conflict exists which

may impair my objectivity or integrity in the service of my clients.

6. Fair Compensation. I will negotiate fairly and openly with my clients

in establishing a basis for compensation, and I will charge fees and

expenses that are reasonable and commensurate with the services

to be provided and the responsibilities and risks to be assumed.

7. Release of Information. I will release public statements that are truthful

and objective, and I will keep information and records confidential

when appropriate and protect the proprietary interests of my clients and

professional colleagues.


35

8. Public Welfare. I will not participate in any racial, sexual or political

discrimination related to any assignment I may undertake. I will avoid

any conduct that would be considered unethical or will interfere

or conflict with any laws, statutes or regulations, and I will uphold the

safety, health and welfare of the public in the performance of my

professional duties.

9. Professional Development. I will continue to develop my professional

knowledge and competency as a practitioner, and I will contribute to the

advancement of CM practice as a profession by fostering research

and education and through the encouragement of subordinates and

fellow practitioners.

10. Integrity of the Profession. I will avoid actions which promote my own

self-interest at the expense of the profession, and I will uphold

the standards of the construction management profession with honour

and dignity.

2.2.2 Ethics of professionals

The accepted orthodox concept within the construction industry has been

a close relationship between ethical behaviour and the notion

of professionalism. Most of the professional organisations, somewhere within

their code of conduct, will require their members to behave or act in an ethical

manner. However, in not so distant past, professionals also came under criticism

for becoming self serving monopolies with detrimental outcomes for the

industry as well as dis-empowering the “non-professionals” whilst facilitating

control on behalf of elite groups. However, it is difficult to establish any

universal definition of a “professional” and equally difficult it is to distinguish

between professional associations from other occupational groups.

Professionals are perhaps best identified by the expectation that they should

have an underpinning body of knowledge or skillset that is accumulated through

a prolonged period of training. Entry qualifications are often governed by the

professional organisations, which also tends to establish unique social

configurations to individual professions31.

Ethics has been defined as “a system of moral principles governing

the appropriate conduct for an individual or group”. The same source extends

the understanding of this branch of philosophy, by describing moral as being

“based on what somebody’s conscience suggests is right or wrong, rather than

31Vollmer & Mills, 1996; Murray et al 2009


36

what the law says should be done” (Encarta, 2001: 876). However, ethics is not

about simply recognizing an objective good. It comprises a study of thought,

language, reasoning, processes and judgement that informs the choices people

make in their daily lives that affect their own well-being and that of others

(Wasserman, 2000).

Many opinions have been expressed in the literature as to whether or not ethics

should play a part in general business practice. In recent times, however, there

appears to be greater consensus on this issue. It is now commonly recognized

that the general concepts of ethics are applicable in business, on the grounds

that business exists not solely to suit certain individuals, but because business

serves society and, in addition, meets collective and individual needs (Vee

and Skitmore, 2003).

Within the context of general commercial activity, decision-making

is a fundamental component of most business management processes. Decision-

making usually entails a process of stating the problem, analysing the issues,

identifying possible courses of action, deciding on the best alternative, and then

implementing the chosen ‘solution’. Many decisions facing management turn

out to be ethical decisions or to have ethical implications or consequences.

According to Carrol (1996), five important points are pertinent to the character

and nature of ethics and decision-making, namely, that most ethical decisions

have: extended consequences i.e., multiple alternatives; mixed outcomes;

uncertain consequences; and personal implications. Reflecting on the above five

points, it becomes quite evident that ethics involves both personal and business

decision-making. Given this, Christabel and Vincent (2003) assert that,

as a person’s judgement is in essence a reflection of their true beliefs and

values, the image of the organisation is in reality a reflection of the value

systems reflected by individual organisation members. Furthermore, Carroll

(1996) proposes that that the system of ethical business decision-making should

entail considerations such as: the contemplated action, behaviour or decision;

norms or standards for comparison; and the guiding principles of business ethics

(justice, rights, etc.). If an organisation wants to promote ethical behaviour,

it needs to focus on those factors that can be controlled. The model proposed

by Stead et al. (1990) provides an understanding of ethical behaviour

in commercial enterprises. When analysing the individual factors depicted

by the model, one can see that there is limited control over individual

employee’s natural inclinations.

Individual Factors (these have been discussed in greater detail in section 2.4).

• Personality

• Ego strength


37

• Locus of control

• Socialisation

• Religion

• Age

• Work Experience

• Forms of unethical behaviour

Research undertaken by CIOB, amongst other professional bodies, has shown

that most unethical behaviour in the construction industry is experienced in the

form of unfair conduct, negligence, conflict of interest, collusive tendering,

fraud and bribery. Furthermore, in terms of professional conduct, it has been

identified that the majority of professionals believe that obligations between the

client and public are of equal importance.

Unfair conduct It is difficult to define such practices. Fairness is often linked with dishonesty.

It could be argued that dishonesty has a stronger linkage to illegal behaviour

and is thus more appropriately linked to fraudulent activity. Instances which

are quoted as being ‘unfair’ predominantly include actions by government

agencies such as “biased tendering evaluation systems, the process of re-

tendering and shopping for prices after tenders have closed”, as well as state

bodies “making it difficult for private businesses to compete”. Other instances

described mainly upon difficulties commonly experienced in the realm

of consultants’ professional fees, such as “non-payment of consultants’ fees

by clients and developers after engaging consultants”. It is noteworthy that most

of the latter type of complaint are fairly easy to prevent if consultants employ

defensive contractual strategies, thereby helping to distinguish between business

practices that are ‘unfair’ from those that are illegal.

Negligence

Professional competence comprises efficiency (in doing a task economically),

sufficiency (in providing a full service to a client) and capacity (which

is the ability or capability to undertake the commission). In contrast, negligence

is the want of proper care, and also the omission of such duty of care for the

interests of others as the law of delict may require. The Encarta Dictionary

(2001: 754) has defines negligence as “failure to exercise the degree of care

considered reasonable under the circumstances, resulting in an unintended

injury to another party.” To be negligent, the professional must have had the

ability to be competent, but has disregarded the crucial importance of exercising

this ability. The negligent professional disregards the course of action which

is in the client’s best interests.


38

Conflict of interest This falls within a ‘grey area’, in as much as it often involves a personal

interpretation of whether or not certain behaviour is commonly acceptable,

rather than if it is illegal. The onus should clearly be placed upon individuals

to declare all possible instances of potential negative interpretation, before

proceeding with projects. Studies suggests that there is a high incidence

of unacceptable behaviour of this type.

Collusion The Oxford Dictionary (1982: 184) defines collusion as “fraudulent secret

understanding, especially between ostensible opponents”. The primary problem

with collusion is that it is contrary to the principles of free competition.

It benefits only the parties to the collusive agreement at the expense of those not

privy to the arrangement, including principals and other contractors. Sheldon

(1982) examined to some considerable extent collusion in the United Kingdom.

He holds that tendering may be conducted a priori through collusive agreements

because such agreements are “… an attractive means of maintaining a steady

flow of work and achieving higher joint, risk-adjusted, discounted profits”

(Sheldon, 1982: 12). Lee’s (1990) study of collusion in the US highway

construction industry has demonstrated that collusion causes a reduction in the

number of available builders, an increase in the average bid price,

and a reduction in bid variance irrespective of the particulars of the collusive

tendering arrangement. In practice this could lead to artificially increased

building prices, possible quality compromises, company failures through unfair

competition, a negative industry image, and decreased employee productivity

through moral dissatisfaction.

Fraud

Bologna et al. (1996 : 9) describe fraud as being “deceit, trickery, sharp

practice, or breach of confidence, by which it is sought to gain some unfair

or dishonest advantage”. Once again, the distinction is evident between an act

that is illegal, and that which may be interpreted as ‘unfair conduct’. The more

common application of this term, however, would suggest a form of intended

unlawful action. A typical example of this would include tampering / altering

documents used for the contractual administration of a project.

Bribery

Bribery is another area that was identified by CIOB survey as an area

of concern. There is a thin line between what is considered acceptable gifts

and bribery / corruption. Corrupt payments can be categorized in different ways,

namely: paying a person to do what they should ordinarily do to expedite


39

matters; paying a person to use their power or influence over others to get

something done by those others; and compelling a person to pay (extortion)

through threats of what will occur if the payment is not made. The World Bank

Sanctions Committee define corruption as the “offering, giving, receiving

or soliciting of anything of value to influence the action of an official in the

procurement or selection process or in contract execution”

(www.worldbank.org, August 2003, as cited by Shakantu, 2003). It can

be deduced therefore that bribery is at the core of what is commonly viewed

as unacceptable, corrupt practice.

A summary of key findings through the CIOB survey shows Figure 3.

Professional Ethics in Construction

In order to discuss professional ethics, it is important to understand what

is meant by the term “profession”. The core of professionalism has been defined

as “the possession and autonomous control of a body of specialized knowledge,

which when combined with honorific status, confers power upon its holders”

(Greenhalgh, 1997: 63). Professionals have always been linked with the notion

of “service”.

This perceived relationship provides the basis for those who describe

a profession as a group of people organized to serve a body of specialized

knowledge in the interests of society (Appelbaum and Lawton, 1990). Savan

(1989: 179) specifically takes this view in describing professions as “groups

that apply special knowledge in the service of a client”. Bowie (1991) argues

that this altruistic spirit of a genuine profession cannot be achieved without

an ethics component.

The professions have always been linked with the notion of 'service'. Thus,

a profession has been described as a group of people organised to serve a body

of specialised knowledge in the interests of society (Appelbaum & Lawton,

1990:p4). Similarly, Whitbeck (1998:p74) confirms that professions

are "occupations that both require advanced study and mastery of a specialised

body of knowledge and undertake to promote, ensure or safeguard some matter

that significantly affects others’ well-being”. Its responsibilities have been

variously described as including the satisfaction of "an indispensable

and beneficial social need" (Johnson, 1991:p63- 64); and a goal of service to the

public (Murdock and Hughes, 1996, cited in Fryer, 1997:p31). A professional

operates in a world of people with whom they work, colleagues and other

specialists, and people whom they serve, such as their clients and the public

(Pressman, 1997:p10) - a relationship that has been termed as “consensual

and fiduciary” (Pressman, (1997). Professionals are not exempt from the


40

common ethical behaviours - such as obligations, duties and responsibilities -

that are binding on ordinary people (Johnson, 1991:p131) and are usually bound

by a set of principles, attitudes or types of character dispositions that control the

way the profession is practiced. This has been termed Professional Ethics

(McDowell, 1991:p48), and concerns potential problems confronting members

of a profession or group and their impact on society (Johnson, 1991:p132), with

the implication that fairness should be attributed not only to clients but also

colleagues and the public (Johnson, 1991:p117). One important aspect is that

of conflict of interest, defined as an interest which, if pursued, could keep

professionals from meeting one of their obligations (Coleman, 1998:p34).

Another is the relevant professional right termed the “Right of Conscientious

Refusal” (Martin & Schinzinger, 1996), which is the right of an employee

to refuse to partake in unethical conduct when forced to do so by an employer.

This may occur in work or non-work situations and may not necessary involve

breaking the law (Whitbeck (1998:p51). Conscientious refusal may be done

by either simply not participating in the activity that one sees as immoral,

or it may be done with the hope of making a public protest that will draw

attention to the situation that one believes is wrong (Whitbeck, 1998). Different

professions, however, have different reputations insofar as ethical behaviours

are concerned. In a recent public opinion survey, for example, architects were

rated superior in ethical behaviour to lawyers, some doctors and almost

all businessman and businesswoman; with the clergy being ranked the highest

(Pressman, 1997). Lawyers, it seems, are expected to prioritise their obligations

to the client over their obligations to the public even if their client is guilty

of committing a crime, regardless of how heinous the crime (Johnson, 1991).

Bayles (1989) defines professional ethics as a system of norms. It therefore

deals with both the morality and behaviour of professionals in their day-to-day

practice, and ascribes moral responsibility not to an individual, but to all

professionals practicing in a particular profession. This automatically ties up

with the more practical concepts and expectations from the public,

encompassing issues such as competence, responsibility and willingness

to serve the public (Carey and Doherty, 1968). As the number of professions

and professionals increase and the work environment becomes more ethically

sensitive, the adoption of ethical principles, and the enforcement of standards

become matters of increasing importance to society (Fan et al, 2001).

The reason for this is that when lapses in ethical behaviour occur, the credibility

of the entire profession is endangered. The problem that faces any professional

community is one of ethical quality control. How can it regulate itself

effectively in order to justify its autonomy, while ensuring that the clients of its

members and society as a whole benefit from the profession’s and the individual

professional’s actions, rather than becoming their victims (Brien, 1998).


41

2.2.3 Compliance rules for professionals

Individuals who are members or professional bodies will typically need

to adhere to a set of rules and regulations as promulgated by the professional

institution. The rules of conduct for members will usually apply to all members

worldwide. They cover those matters for which individual members

are responsible and accountable in their professional lives.

These rules typically focus on the regulatory goals and adopt the principles

of better regulation which may include:

• Accountability

• Ethical behaviour

• Consistency

• Transparency

These Rules set out the standards of professional conduct and practice expected

of members of the particular profession. These rules do not repeat obligations

placed on members by the general law, for example in the areas

of discrimination and employment.

Not every shortcoming on the part of a member, nor failure to comply with

these rules, will necessarily give rise to disciplinary proceedings. However,

a failure to follow any guidance associated with the rules is a factor that will

be considered should it be necessary to examine the behaviour of a member.

In such circumstances a member may be asked to justify the steps they took and

this may be taken into account. A member should be guided as much by the

spirit of the rules as by the express terms. As an example, in UK, Members

of the CIOB are governed by the Royal Charter and the Bye-Laws32

. Under

Bye-Law 30 all members are bound to further to the best of their ability

the objects, interests and influence of the Institute. Members shall also observe

the Rules and Regulations of Professional Competence and Conduct and all

other Rules and Regulations of the Institute for the time being in force.

32See www.ciob.org for more information

m16 ethics and professionalism eng 17122013 final b5 manuals/cloemc-i-iii manuals/m16... · 2019....

Documents