Importance of Ethics in the Construction Industry

Background to the study:

Introduction:

• In the construction industry, following values based on ethical thinking is becoming harder due to the requirements and pressures put on professionals to achieve goals. In this current state and time, too many, money and success governs all. Most professionals in the industry try their upmost to act in an ethical manner but grey areas do exist. It is easy to get involved in situations involving conflict of interest, bribery, negligence and environmental misconduct. An organisations ability to enforce ethical behavior relies on the size of the firm where smaller companies tend to emphasise less on Corporate Social Responsibility as bottom lines and survival are higher up on the hierarchy. It is important that professionals act with integrity in their work where business and professional ethics should be driven by personal ethics and standards.

Importance:

• The construction industry is deemed to be one of the most fraudulent industries worldwide (Transparency international, 2005) where 48% of construction professionals feel that corruption is commonplace within the industry (CIOB,) and 41% had been personally offered bribes at least once during their careers according a survey (,2006).

• Ethical codes alone are not adequate enough to ensure transparency by professionals where these codes should be enforced using employer training and the appointment of personal such as an ethics officer to oversee ethical issues within the organization (Calhoune, 2001). Therefor the size of a firm plays a key role in its ability to apply CSR.

Aim & objectives of the study:    

Aim:

• Determine the importance of ethics in the construction industry and the effects it has on the outcome of an organisations success depending on firm size

Objectives:

• To determine factors affecting professionals behavior in ethics in the construction industry
• To identify what role ethics has on a project and firms success
• To show the importance of ethics in the current construction industry and its effects
• To determine how organisation size plays a role in the enforcement of ethics.

ResearchQuestions:

• Why and how do ethical issues occur in the construction industry?
• How do ethical principles differ and apply to the construction industry depending on firm size or organisation structure?
• What is the driving force that prevents ethical behavior by professionals in the industry?
• What impact does good ethical behavior have on a firms or project success?

NAME: Amaury Fayd’herbe de Maudave

REGISTRATION NO.:G20657902

ResearchMethodology:

• A literature review was done to understand the issues around business ethics in the industry, the different types of ethical misconduct and its impact on a firm’s outcome and how the size of an organisation effects the level of importance of ethical behaviour and conduct by professionals.
• A Questionnaire survey will be developed and given to construction firms of varying size concerning individuals experiences on ethical issues within the construction industry
• A Statistical/data analysis of the survey feedback will be performed in order to answer the set out aims and objectives

Keyfindingsfrom the literature review:

• The most common unethical situations faced in the construction industry include; cover pricing, bid cutting, late and short payments, lack of safety ethics on site, unfair tender/final account negotiations towards contractors.

• Good ethical behavior is key in gaining optimal benefits and good functionality from the industry
• Most companies irrespective of size have some sort of ethical code of conduct in place
• Ethics in the construction industry’s advancement relies heavily on the implementation and policies of ethical guidelines set up by private organisations and professional bodies
• Large firms tend to apply more stakeholder theory whereas small firms use social capital
• SMEs should not have to adopt the same strategies and managerial tools as large organisations
• An ethical code of conduct is unlikely to affect those aware of blatant unethical conduct but more so to situations where there is unintentional ethical misconduct
• An absence of a formal ethical code of conduct does not mean that there is a lack of concern for ethics
• Small firm personal do not feel compelled to act unethically but due to pressure can act in a way considered to be less than ethical, pressures including lack of resources and competitive market

Conclusions:

• Pressures faced in the industry affect behavior which include economic requirements and deadlines, competitive nature of the industry and for smaller firms lack of resources to perform at the desired level
• Smaller firms use their strong relationships built through trust, reputation and sincerity with stakeholders, customers and local community to improve their stake in the market. On the overhand small firms are unable to obtain relational capital through managerial tools such as ethical codes of conduct which in the long term is helpful in creating value and revenue
• Small firm personal tend to trust their own virtue over set codes including instinct and good habit from practical experience.
• Larger firms generally use formal protocols as a method to communicate ethical conduct whereas small firms tend to rely more on close working relationships
• A surveyors ethical standard is just as well affected by company culture of the organisation which is set at management level
• Firms with high ethical standards benefit financially due to good reputation, good client satisfaction and staff retention