Ethics involves concepts of right or wrong, fair and unfair, moral and immoral. Most people and most societies consider lying, cheating, stealing and harming others to be unethical, immoral and socially unacceptable. Honesty, integrity, keeping one’s word and respecting the rights of others are generally considered ethical and virtuous – they are traits that a good person is supposed to believe in and to display. The focus of this paper is to examine ethics best practices and how they can make a positive contribution when engineers and project managers (1) conduct their activities in an ethical manner and (2) demonstrate socially responsible behaviour by being committed corporate citizens.
Abstract
Ethics involves concepts of right or wrong, fair and unfair, moral and immoral. Most people and most societies consider lying, cheating, stealing and harming others to be unethical, immoral and socially unacceptable. Honesty, integrity, keeping one’s word and respecting the rights of others are generally considered ethical and virtuous – they are traits that a good person is supposed to believe in and to display. The focus of this paper is to examine ethics best practices and how they can make a positive contribution when engineers and project managers (1) conduct their activities in an ethical manner and (2) demonstrate socially responsible behaviour by being committed corporate citizens.
1.0 Introduction
“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in free and open competition, without deception or fraud”. Milton Friedman – Nobel Prize winning economist
Thompson Jr. et al [1] argue that Ethics involves concepts of right or wrong, fair and unfair, moral and immoral. Most people and most societies consider lying, cheating, stealing and harming others to be unethical, immoral and socially unacceptable. Honesty, integrity, keeping one’s word and respecting the rights of others are generally considered ethical and virtuous – they are traits that a good person is supposed to believe in and to display. Beliefs about what is ethical serve as a moral compass in guiding the actions and behaviours of individuals and organisations. The issue here is how do notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical translate into judging engineers and project managers’ decisions, strategies and actions. Professional ethics is the application of general ethical principles and standards to professional behaviour. Professional ethics does not really involve a special set of ethical standards applicable to only professional situations. Ethical principles in professions are not materially different from ethical principles in general.
Why? It is because, professions must draw their ideas of “the right thing to do” and “wrong thing to do” from the same sources as anyone else. If dishonesty is considered to be unethical and immoral, then dishonest behaviour in professions – whether it relates to customers, suppliers, employees or shareholders – qualifies as equally unethical and immoral. If the society deems bribery to be unethical, then it follows that it is unethical for professionals to participate in making payoffs to government officials or any other party to facilitate business transactions or bestow gifts and other favors on prospective customers to win or retain their businesses.
2.0 ETHICS IN THE GLOBAL COMMUNITY
Beliefs of right and wrong, fair and unfair, moral and immoral, ethical and unethical are present in all societies, organisations and individuals. Some concepts of what is right and what is wrong are universal and transcend most all cultures. For example, being truthful (or not lying) strikes a chord of what is right in the peoples of all nations. Demonstrating integrity of character, not cheating, and treating people with dignity and respect are concepts that resonate with people of most religions and culture. But the school of ethical relativism holds that there are important instances in what is deemed fair or unfair, what constitutes proper regard for human rights, and what is considered ethical and unethical, varies from one society or country to another. Hence, this school of thought contends, there are occasions when cultural norms and the circumstances of the situation determine whether certain actions or behaviours are right or wrong.
2.1 Cross Culture Differences in Ethical Standards
In Japan, China and other Asian societies, for instance, there is a strong ethic of loyalty to work groups and corporations. In Japan, such beliefs translate into high cultural expectations that company personnel will exhibit strong loyalty to superiors and to their employer [2]. Japanese employees, believing in the importance of loyalty to their employer, are therefore unlikely to blow the whistle when they see their company engage in wrong doing. In Italy, people are relatively carefree; they live for the moment and are generally willing to take chances about what the future will bring. As a consequence, an Italian manager may be disinclined to keep a promise or keep contractual obligations; further, there are often low levels of trust between parties in business deals and honest communications are frequently lacking [3]. In China, there is greater societal toleration of child labour, dangerous working conditions, and passing off fake or inferior products than in some other parts of the world. In addition, since China’s history is more tied to the functioning of a planned or socialist economy, there is no strong concept on what constitutes moral or ethical behaviour in free market transactions [4]. One study revealed that managers in Hong Kong rank taking credit for another’s work and accomplishments at the top of a list of unethical behaviours and, in contrast to managers in Western cultures, considered it more unethical than bribery or illicitly obtaining information about competitors [5]. In Mexico, nepotism is more acceptable than in the United States or many other countries.
2.2 Bribes and Kickbacks
One of the thorniest ethical challenges that multinational companies face is the degree of cross-country variability in payment of bribes as part of business transactions. In many countries in Eastern Europe, Africa, Latin America and Asia, it is customary to pay bribes to government officials in order to win a government contract or facilitate a business transaction. In some developing countries, it is difficult for any company, foreign or domestic to move goods through customs without paying off low-level officials [6]. Likewise, in many countries it is normal to make payments to prospective customers in order to win or retain their business.
“Politicians and public officials from the world’s leading industrial countries are ignoring the rot in their own backyards and the criminal bribe-paying activities of multinational firms headquartered in their countries.” Peter Eigen – Chairman of Transparency International (2002) In her paper titled “Turning a Blind Eye” – Corruption and the UK Export Credits Guarantee Department, Dr Hawley S. (June 2003) [7], states that Corruption – broadly defined as “the abuse of public or private office for personal gain” – takes many different forms, from the routine cases of bribery or petty abuse that are said to “grease the wheels” to the amassing of spectacular personal wealth through embezzlement or other dishonest means [8]. The international community is adamant that corruption must be stopped. Yet there is a deep hypocrisy in its approach to doing so. At the heart of this hypocrisy are the taxpayer- funded export credit agencies of industrialised countries.
The international community is demanding that the governments of poorer countries eradicate corruption within their countries if they want to be considered eligible to receive Western aid [9]. Yet, despite a major international convention on combating bribery signed by 34 countries in 1997 and in effect from February 1999, large, mainly Western, companies continue to bribe their way into getting governments contracts in poorer countries.
Many of these companies are supported in various ways by export credit agencies. These are government departments, found in most Western countries, which use taxpayers’ money to insure domestic companies doing business abroad against risks such as the company not being paid or the whole project collapsing. The price of Western companies’ bribery is, however, ultimately paid for not by Western governments but by the people of the Southern countries in which the companies operate. They pay for it in the form of increased debts incurred for overpriced and poorly planned projects that often provide little benefit to people or country.
The Global Corruption Report 2009 [8] presents evidence of persistently close linkages between business and governments in developing and industrialised countries alike, multiple conflicts of interest and the growing risks of disproportionate influence on the part of corporate lobbying. Case studies from Bangladesh, Germany, Malaysia and Trinidad and Tobago all document a precariously close nexus between private business and public institutions. In the United Kingdom, politically connected firms are estimated to account for almost 40 per cent of market capitalisation – a level that rises to a staggering 80 per cent in Russia. In addition, the scale and rapid growth of lobbying raises serious concerns about equal visibility and the right to get heard for citizens who cannot afford to hire lobbyists. In Brussels an estimated 2,500 lobbying organisations with 15,000 lobbyists vie for influence on EU policy-making. In the United States, lobbying expenditures by companies have risen sharply and, at state level, lobbying expenditures average US$200,000 per legislator, while five lobbyists vie for the attention of each lawmaker.
According to Dr Hawley [7], between 1994 and 2001, the US government received reports of 400 international contracts worth $200 billion signed between governments and businesses worldwide that purportedly involved bribery [11]. Between May 2001 and April 2002 alone, the US government learned of 60 contracts worth a total of $35 billion that had been affected by bribery [12]. Some 70% of the allegations that the US government received in 2000-2001 involved companies from countries that had signed up to the OECD’s 1997 anti-bribery Convention [13]. World Bank research shows that one-third (35%) of foreign companies operating in the countries of the former Soviet Union pay kickbacks, of which US and European companies are among the worst offenders. The Bank concludes that its research does “not support the notion that transnational bribery laws . . . have led to higher standards of probity in overseas public procurement” [14]
3.0 ENGINEERING AND ETHICS
This section draws a lot from Anke van Gorp paper “Ethical issues in Engineering, Safety, and Sustainability”. Engineering ethics is the field of study that focuses on the ethical aspects of the actions and decisions of engineers, both individually and collectively. A rather broad range of (ethical) issues are discussed in engineering ethics: professional codes of conduct, whistle-blowing, dealing with safety and risks, liability issues, conflicts of interests, multinational corporations, privacy etc. A substantial amount of literature on the teaching of engineering ethics to engineering students has been developed since the beginning of the 1980’s, [15, 16, 17a, 18, 25] A salient feature of engineering ethics literature is that a lot of it has been developed based on studies of disasters like the Challenger disaster [19, 20a]. Another feature of engineering ethics is that, especially in the United States, there are a lot of proponents who regard engineering ethics as a kind of professional ethics [21, 20b, 17b]. The idea is that the engineer as a professional has obligations not only to his or her employer but also to the general public, as for example doctors or lawyers also have obligations.
Engineers should adhere to professional codes of conduct that state, for example, that engineers shall hold the safety and welfare of the public paramount. Based on descriptions of the Challenger disaster, Davis emphasizes that there is a difference between engineers and managers. Engineers should adhere to their professional norms and hold safety paramount and managers do not do this [20a]. This tendency to regard engineering ethics as a kind of professional ethics has led to a focus on the individual engineer and his or her responsibilities in his or her job and profession in most (American) engineering ethics textbooks. This can also explain the focus on whistle blowing that can be found in some of the engineering ethics literature. The individual engineer should in certain cases take his or her moral and professional responsibilities seriously and blow the whistle. According to Zandvoort et al [22] engineering ethics should focus on more than the individual engineer. They argue that the ethical problems that engineers encounter are partly due to the context they work in. Some of the ethical problems cannot be solved by individual engineers or the profession.
In their paper “The Straight and Narrow Path: Ethical Issues for Design Professionals” [27] Steven G.M. Stein, and Jeffrey H. Winick, conclude that the day to day responsibilities and pressures associated with the practice of engineering are such that it is easy to forget the ethical obligations that one undertakes as a professional. The pressures to perform are immediate and persistent, making the ethical responsibilities easy to ignore. The consequences of doing so, however, couldn’t be more important.
As illustration of the potentially grave consequences of momentarily sidestepping the ethical tenets of the profession, consider the case of Robert Lund. Mr. Lund was the vice-president for engineering at Morton-Thiokol on January 27, 1986. Earlier on that evening, Mr. Lund presided over a meeting of engineers concerning the launch of the space shuttle Challenger. The unanimous opinion of the engineers was that the shuttle launch should be postponed due to the cold temperatures. The concern was that the O-rings securing the rocket boosters might fail. Although neither Mr. Lund, nor any of the other engineers had data to confirm the danger that the sub 40 degree temperatures presented to the launch, they also couldn’t confirm the safety of the launch. Mr. Lund therefore recommended to his superiors that the flight be postponed.
The Space Center nonetheless wanted to launch. They encouraged Mr. Lund’s superiors to reconsider although they reiterated that they would not launch without Morton-Thiokol’s approval. Mr. Lund’s boss, along with Thiokol’s vice-president for shuttle programs reviewed the evidence and concluded that the O-rings would hold at the expected temperature. Both men were ready to sign a launch approval on Mr. Lund’s assent. Mr. Lund was the only thing that stood in the way of launching the shuttle. Mr. Lund’s first response was to repeat his concerns and to stand by his decision to postpone the launch. His boss asked him to reconsider and suggested that he “take off his engineering hat and put on his management hat.” Mr. Lund did and he authorized the launch.
The next morning the Challenger exploded during lift-off, killing all seven astronauts due to the failure of an O-ring. Mr. Lund was not prosecuted for his actions. He broke no laws. But Mr. Lund did allow the pressures of the circumstances to convince him to act against the conclusions he had reached as an engineering professional. Certainly, Mr. Lund’s experience is not reflective of the day-to-day consequences of ignoring the ethical responsibilities placed on the shoulders of design professionals. Nevertheless, the experience is nonetheless instructive as to the tremendous importance of those ethical responsibilities.
3.1 Moral responsibility and the trust relationship between engineers and society
Engineers have specific knowledge and experience and play an important part in the design of products.
Engineers are given power to decide in design processes.
The regulative framework limits this power. In this thesis, I will assume that a trust relation exists between society and engineers designing products. Engineers are given “a licence to operate” based on this trust relationship. Being trusted by society brings with it responsibilities for the engineers. Engineers have responsibilities towards their customers and to society as a whole. The codes of ethics formulated by engineering societies all state that engineers should display integrity and honesty in their work, if they are to be trusted by customers and society. The Institution of Engineers, Australia [23] states the following in the second of their tenets in their code of ethics [www.ieaust.au].
‘Members shall act with honour, integrity and dignity in order to merit the trust of the community and the profession; [www.ieaust.au, 23]’ In her paper ‘Trust and Antitrust’, Annette Baier [24] uses the examples of plumbers and surgeons to illustrate that we trust them to do what is necessary to fix what is wrong. We trust them and we do not prescribe what they should do exactly to fix, for example a leak. Baier claims that it is not possible to prescribe precisely what plumbers and surgeons must do because we do not have that knowledge. If we would be able to prescribe precisely step by step what the plumber has to do and what he should not do then we could probably repair the leak ourselves. My claim is that in a similar vein we trust engineers to design safe products without prescribing precisely what they should do and refrain from doing.
The trustworthiness of engineers should not just refer to not acting on bad intentions towards the person(s) trusting you. Trustworthiness also includes being competent [26]. Engineers designing products have to have the competence to make good designs if they are to be trusted as engineers. Trustworthy engineers know what their competence is and when to ask someone else for help or advice to produce a safe design. Trust in engineers that mean well but do not have a clue as to what they are doing is misplaced.
The public expects engineers to design products that will, in normal circumstances and use, not lead to disasters. If disasters do happen then trust may have to be reconsidered. Perhaps the design engineers behaved in an untrustworthy manner or maybe some unanticipated and unforeseeable circumstances materialized. A regulative framework has to incorporate these circumstances if the public is to trust engineers making designs using the same regulative framework again. It can be said that the boundaries within which trust in engineers is the default are drawn anew in cases in which regulative frameworks are changed following undesirable effects.
Trust in engineers might be misplaced if the regulative framework is not adequate. I assume that an adequate regulative framework provides a basis for warranted trust. If trustworthy and experienced engineers are given regulations that they should follow and do indeed follow, these regulations should lead to the protection of what people value. This might be achieved by requiring that the framework is accepted. The requirements that a regulative framework should be complete, unambiguous and consistent can be regarded as requirements that make sure that the rules of a regulative framework can be used in design processes.
4.0 ETHICAL CHALLENGES IN THE CONSTRUCTION INDUSTRY
Profession is an occupation that requires both advanced study and mastery of a specialized body of knowledge and undertaken to promote, ensure or safeguard some matter that significantly affects others’ well being [27]. Almost every profession has its codes of ethics to provide a framework for arriving at good ethical choices. Therefore, professional ethics is a system of norms to deal with both the morality and behaviour of professionals in their day-today practice, and ascribes moral responsibility not to an individual, but to all professionals practicing in a particular profession. For the building and designing professions, the incalculable value of human life demands nothing less than the highest moral considerations from those who might risk it otherwise [27].
The construction industry is a ‘perfect’ environment for ethical dilemmas, with its low-price mentality, fierce competition, and paper-thin margin [28]. Jordan, 2005 [29] stated that unethical behaviour is taking a growing toll on the reputation of the industry. From a survey conducted by FMI [28], 63% of the respondents whom are the construction players feel that construction sector is tainted by unethical conducts. Surveys conducted by researchers in Australia (Vee & Skitmore, 2003) [27] and South Africa (Pearl et al, 2005) [30] identified several unethical conducts and ethical dilemmas in the construction industry such as corruption, negligence, bribery, conflict of interest, bid cutting, under bidding, collusive tendering, cover pricing, frontloading, bid shopping, withdrawal of tender, and payment game. It is evident that there exist significant areas of concern pertaining to the ethical conducts practiced by the construction professionals.
4.1 Examples of Efforts by Professional Bodies
True professions have codes of conduct, and the meaning and consequences of those codes are taught as part of the formal education of their members. A governing body, composed of respected members of the profession, oversees members’ compliance. Through these codes, professional institutions forge an implicit social contract with other members of society: Trust us to control and exercise jurisdiction over this important occupational category. In return, the profession promises, we will ensure that our members are worthy of your trust—that they will not only be competent to perform the tasks they have been entrusted with, but they will conduct themselves with high standards and integrity. On balance we believe that a profession, with well-functioning institutions of discipline, will curb misconduct because moral behavior is an integral part of the identity of professionals—a self-image most are motivated to maintain.
There are however many efforts taken to increase the ethical standards and integrity among the professionals in construction sectors worldwide. According to Pearl et al (2005) [30], the regulatory professional Acts relating to the built environment professional sector in South Africa were totally overhauled in the late 1990’s and a new suite of professional Acts were promulgated in 2000 to enhance the professionalism. Meanwhile, in America, the Construction Management Association of America (CMAA) has updated its code of ethics to include a wider range of professional services as well as professional services among construction players (CMAA, 2006). A Standard of Professional Conduct to govern the ethical practices in the American civil engineering profession was published by the American Society of Civil Engineers (ASCE, 2007). On the other hand, Australia has their own codes of tendering to enhance fairness and transparency (Ray, 1997) [31].
According to the National Society of Professional Engineers NSPE, Engineering is an important and learned profession. As members of this profession, engineers are expected to exhibit the highest standards of honesty and integrity. Engineering has a direct and vital impact on the quality of life for all people.
Accordingly, the services provided by engineers require honesty, impartiality, fairness, and equity, and must be dedicated to the protection of the public health, safety, and welfare. Engineers must perform under a standard of professional behavior that requires adherence to the highest principles of ethical conduct. The NSPE Code of Ethics for Engineers contains six fundamental canons. Canon 4 that deals with conflict of interest states that “Engineers shall act in professional matters for each employer or client as faithful agents or trustees, and shall avoid conflicts of interest or the appearance of conflicts of interest”.
Consultants in both developed and developing countries are confronted with the hazards of corruption in their everyday work – particularly when it comes to government procurement. International Federation of Consulting Engineers (FIDIC) issued a policy statement in 1996 as a first step in exploring ways, together with the large multilateral funding institutions, to protect the consulting engineering industry from exposure to corruption. FIDIC’s policy statement concludes that corruption is basically wrong because it undermines the values of society, breeds cynicism and demeans the individuals involved. It is more than stealing funds, it is stealing trust.
According to FIDIC Policy Statement on Corruption 1996 [32]. “Corrupt practices can occur at all stages of the procurement process: in the marketing of engineering services, during the design; in preparing tender documents (including specifications); in pre-qualifying bidders; in evaluating tenders; in supervising the performance of those carrying out the construction; issuing of payment certifications to contractors; and making decisions on contractors’ claims.”
Customers trust companies to provide the goods and services contracted and paid for. Companies trust customers to pay on time. Likewise, vendors trust companies to pay them on time and companies trust the vendor to deliver on time. Many times in the middle of these affairs will be a project manager (PM).
While the PM may not be a high-visibility position like a CEO, the ethics of a PM can reflect upon a company. They can reflect upon a department. Ethics or the lack thereof can even reflect upon an entire profession. That is why the Project Management Institute (PMI) has developed a Code of Ethics and Professional Conduct. This code is important enough that a PM must agree to the Code before receiving their credentials, such as the Project Management Professional (PMP). The emphasis that PMI places upon ethics is unmistakable in its purpose statement: “The purpose of this Code is to instill confidence in the project management profession and to help an individual become a better practitioner. We do this by establishing a profession-wide understanding of appropriate behavior. We believe that the credibility and reputation of the project management profession is shaped by the collective conduct of individual practitioners.”
In the UK, the Office of Government Commerce (OGC), representatives from other government departments and representatives from industry have come together and put up the Government Procurement Code of Good Practice. The Government Procurement Code of Good Practice sets out the core values and behaviour for all members of central civil government’s supply chain: both government organisations and their suppliers. It is a code of conduct for all members of the supply chain that encourages all participants to work together openly and co-operatively. It also represents a commitment that they are serious about wanting to be better customers and better suppliers, within relationships that can bring mutual reward.
4.3 The cost of unethical Practices in Construction and Project Management
The construction industry is one of the most lucrative of industries; unfortunately, in 2002, Transparency International’s (TI’s) Bribe Payers Index survey found that it also has an unenviable stigma of being labeled the sector to be most heavily entangled in corruption worldwide (Transparency International 2002).
TI confirms that corruption can be found in every phase of the construction process, from the preliminary planning stage, to the awarding of contracts, to the employment of subcontractors and to the operation and maintenance of projects: The tender process may be corrupted by international pressure. Through offers of arms or aid the government of a developed country may influence a developing country to make sure that a company from the developed country is awarded a project, even if it is not the cheapest or best option.
Engagement in corrupt practices is not only illegal in worldwide jurisdictions; it also transgresses the ethics codes established by the construction industry professional bodies. As such, the exposure, sanctions and eradication of corruption within the international engineering and construction industries fall under the Corporate Social Responsibility (CSR) umbrella [32].
Indeed, the Chairman of Transparency International (Eigen 2005) noted that: Transparency in public contracting is arguably the single most important factor in determining the success of donor support in sustainable development. Furthermore, the Major Projects Association (2006) notes that the current emphasis on corporate responsibility has given rise to anti-corruption mechanisms and anti-corruption codes of conduct in many companies. The dilemma for engineering-construction companies in the West is the stringent application of such codes, particularly in overseas developing countries. According to Corner House (2000) if corruption is growing throughout the world, it is in large part fueled by policies and programmes that are being pushed by Western governments and which are further underwritten by poor governance and misdirected funds in the North [32].
It is evident that the cost and the resultant impact of corruption within the global construction industry can be viewed from a buyer’s or a seller’s perspective as well as that of societal stakeholders. The American Society of Civil Engineers (2005) adopted TI’s conservative estimate that ten per cent of the global construction turnover – US$3.9 trillion – is lost through bribery, fraud and corruption; i.e. about US$390 billion is diverted annually from projects that provide water, pollution control, electricity, roads, housing and other basic human needs. Given the apparent magnitude of corruption within the international construction sector, it is perhaps no surprise that Transparency International has published a special focus report on Corruption in Construction and Post-conflict Reconstruction with one chapter devoted to the ‘cost of corruption [32].
5.0 CONCLUSION
Bribery and corruption have been highlighted as common breaches of good governance practices and destroyers of value in companies and countries [33]. The underbelly in most companies is within the area of procurement. While a number of measures can be put in place to minimise the problem of corruption, one of the key tools facilitating ethical conduct is the appropriate practice of disclosure practices.
Currently, there are various bodies including Transparency International, multilateral organizations such as World Bank (WB) and International Monetary Fund (IMF), international professional societies as well as consumer organizations which have highlighted the curse of corruption and are trying to combat it at different levels [32]. Specifically in the construction industry, “procurement acts” and procedures have emerged in almost all countries and anti-corruption legislations being formulated and implemented.
Governments have also, through ‘disclosure’ requirements, made it difficult for corrupt money to be invested and banked. However, it is also sad to note that corruption is getting very sophisticated and the amount of corrupt money is increasing exponentially. Some developed countries and some developing countries have managed to reduce corruption through political, economical, social and religious awareness.
However, these efforts are very limited in scope, and until and unless human beings are forced to understand that corruption is bad for everyone including themselves, the success will always be limited.
Corruption is a ‘moral’ issue besides being a financial, economical and criminal issue. ‘Morals’ can only be taught voluntarily and also be accepted by the recipients voluntarily. This can be encouraged through the dissemination of CSR values and associated topics such as professional codes of ethics within college and university courses, whether they in engineering, management, law or finance courses.
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This paper was presented at the 18th IEK conference
