TECHNOLOGICAL INSTITUTE OF THE PHILIPPINES

938 Aurora Boulevard, Cubao, Quezon City

COLLEGE OF ENGINEERING AND ARCHITECTURE

Civil Engineering Department

CE 512
CE Laws, Ethics, Codes, and Standards

Research Paper of Unethical Practice in Civil Engineering

SUBMITTED BY:
BANTAYAN, ALYSSA BABES M.
CE52FB1

SUBMITTED TO:
ENGR. RICARDO VIBAS
Instructor

November 13, 2018

Abstract
Unfortunately, many businesses carry out unethical practices. Contractors and the
construction industry are often viewed as being unethical. Regrettably, there are many
contractors who are unethical, but equally, there are also many clients who also engage in
unethical practices and don’t pay contractors the monies they are due. Unethical practices
includes The conflict of interest amongst the professionals like client and contractor project
managers, site engineers, quantity surveyors and designers/architects play crucial roles for the
unethical practices and consequently these practices have adverse impact on the product
quality, faith of clients and investors’ confidence in the construction industry. The contractor’s
unethical practices are under bidding, bid cutting and shopping, bid rigging and over billing.
But from the consultant aspect; lack of supervision, poor monitoring and taking bribes under
different pretend are found to be the encouraging factors for unethical conducts in the
construction industry. It is also found that accepting the bribes, gifts and conflicts of interest
are the most common forms of unethical practices. Hence, this research is aimed at examining
the common forms of unethical practices among professionals in the construction industry as
well as uncovering the factors that have encouraged these practices.

Introduction

The construction industry is a challenging and demanding business sector. Being

ethical sets the tone of the relationship between the contracting parties. As soon as one party
partakes in unethical practices we see the relationships begin to break down, often causing the
project to suffer. When unethical behaviour is uncovered it leads to a breakdown in trust. The
other party id left wondering what other unethical behaviours have been concealed and
haven’t been noticed.

But good ethical practices are an essential part of a company’s reputation. Who wants
to work for a client that is unethical? Who was to employ a contractor that engages in
unethical practices?

Unfortunately unethical behaviour is sometimes contagious. If management engages in

unethical behaviour you can almost be certain that their employees also engage in unethical
practices. When one party is unethical we sometimes see an unethical response from the other
party. When someone engages in an unethical practice we often find they get caught-up with more
unethical practices. Once someone has paid, or received, a bribe it’s easier to repeat the offence in
the future. If management are corrupt in their dealings with the client, or contractor, they
sometimes engage in other unethical practices, even stealing from their own company.

The construction industry faces with some ethical issues that are comprised of but are not
restricted to: conflict of interest, inflation of bills, professional incompetence, poor work delivery,
fraud, bribery, professional misconduct, intimidation and kickbacks among several other evils.
The consequences of these unethical behaviours in the industry of construction can

1|Page
lead to confidence reduction in the profession, continuous insecure practices that risk lives
and property, loss of income by clients and governments, needless and baseless expenditures
that raise levels of poverty and reduce the quality of life amongst other things.

There are several past studies conducted about ethics and unethical practices. For
example, Alsweity (2013), Hamzah et al (2010) and Hassim et al (2010) point out that the
construction industry makes a considerable input to the economic development; advancement
of each and every nationand makes this considerable input regardless of the development
level of the said nation. The authors further indicate that this industry, apart from making such
huge inputs to the economic development and progress, also offers employment of up to 10%
of the total labour force including specialised professionals, skilled and semi-skilled
labourers. The construction industry is a key economic engine that stimulates the economy of
any country. However, the construction sector experiences many moral challenges connected
to behaviours that are comprised of bid shopping, unreliable contractors, lying, claim games,
conflicts of interest, payment games, threats, fraud, collusion and professional negligence
(Ho, 2011). Issues of ethics in the construction industry sectors should be viewed as
something of interest and as a result, it will assist to dismiss the impression that issues like
those are less important or disconnected from the sector of construction (Sinha et al, 2004).
Therefore, in the early stage to design, construction and delivery stage of the project,
numerous factors that rely on the levels of values as well as moral terms like team ethics,
personal ethics, and global responsibility should be considered. This is because all pertinent
principles, which are indirectly and directly altered by the project and its background, will
result to obtain advantages from the whole value supervision of the projects (Mason, 2009).

The construction project achievement chiefly relies on the conduct of the people
taking part in the project from the early start to completion stages (Al-sweity, 2013).
Nevertheless, there are thousands of grievances emerging every other day of different types
and degree concerning operations in the industry of construction. The ethical practices within
the industry as well as the critical stakeholders should be instilled and imposed. Yet, this
enforcement must be founded on true and valuable comprehension on the nature, inspiration
and demonstration of unethical practices if any needed results are to be assured. There exists
a conflict of interest amongst the key parties such as engineer, owner and contractor. All signs
show that the construction industry is required more ethical practice than any other time, but
the misconduct of professionals has risen and there is a huge discord between real conduct of
professionals and the moral responsibilities. This study seeks to examine the ethical issues in
sector of construction and offer an image concerning unethical circumstances in the
construction industry. Hence, this study focuses on analysing the unethical behaviours and
suggesting the preventive measures.

There is an increasing agreement in and out of the industry of construction, that

corruptions as well as other unethical conducts are prevalent in the industry. Issues of ethics in

2|Page
the construction sector ought to be viewed as something of importance; it will assist to
dismiss the ideas that matters like those are less vital to the industry of construction (Sinha et
al, 2004). There are two assertions for the assumption that the ethical issues of professionals
in the modern world are not mainly because of lack of knowledge. The first thing is that in
the unofficial dialogue between unethical activity victims and the professional actors, the
accused professional hardly ever takes the solid position that there is nothing as professional
ethical duties. The duty here is intricate and ethical problems in this scenario ought to be
taken into consideration (Uff, 2003). Among the most prevalent unethical behaviours in
business is corruption, defined as: “the giving of some good, money or service to a suitable
individual for the aim of obtaining an advantaged and positive thought (or acquisition) of
one’s corporate project or product” (Vee and Skitmore, 2003).

Other regularly reported untrustworthy practices are associated with misrepresentation,

carelessness and break of certainty. Deceptive natures, sharp practices, dishonesty, or break of
certainty, whereby it tries to get some exploitative and out of line favourable position, is the
meaning of the unscrupulous routine of extortion (Vee and Skitmore, 2003). It is said the
dishonest behaviour does not eventuate from an individual's childhood, but rather it is a piece of
the strategy of learning reasonable business or being brought into the practice (Vee and Skitmore,
2003). Olusegun et al (2011) demonstrated that there is unlawfully consumed in pay off and
violation to administration authorities in Government workplaces amid the grant of agreement,
execution and in addition instalments. Patrick (2006) expressed that debasement can happen in
various structures and different courses and at any stage of the project amid the construction
venture life cycle.A study done by (Vee and Skitmore, 2003; Pearl et al, 2007) in Australia
exposed that there are many kinds of ethical dilemmas and unethical practices in the construction
industry like negligence, corruption, bribery, bid cutting, under bidding, cover pricing, front
loading, collusive tendering, bid shopping, and withdrawal of tender. Moreover, they also
classified these unethical practices into four universal kinds of actions known as conflicts of
interest and they are: 1) unfair conduct, 2) fraud, 3) collusion, and 4) bribery. Construction
engineering expert witness Paul Gogulski (2014) indicated that owners in the Middle East are
known to be customarily late in payment, resulting to substantial bankruptcy of contractors. A
questionnaire study conducted in USA amongst the construction managers, architects, contractors,
and subcontractors and representatives of the industry revealed that over 80 percent of
respondents have seen untrustworthy behaviour in the construction industry. Offered hones,
especially invert barters and offer shopping, got solid remarks in this review. The lion's share saw
the need for everyone to have and impart moral codes to specialists however, not many practice
this procedure.

3|Page
 A survey in Australia was conducted by Vee of and Skitmore (2003) amongst the project
supervisors, building contractual workers and engineers on the range of moral issues
encompassing the industry of construction and found that 90% subscribed to an expert Code of
Ethics, 45% had an Ethical Code of conduct in their associations while 84% considered great
moral conduct to be a basic hierarchical goal. Ninety-three percent of the members concurred that
"Business Ethics" should be administered by "Individual Ethics", with 84 percent of the members
demonstrating that a parity of both the prerequisites of the client and the impact on people in
general should be kept up. No members saw any instances of businesses attempting to compel
their labourers to join in and unscrupulous conduct. Nevertheless, every one of the members had
encountered or seen some level of dishonest conduct. Eighty-one percent as unjustifiable conduct,
carelessness 67 percent, irreconcilable situation 48 percent, tricky tendering 44 percent, extortion
35 percent, secrecy and legitimacy break 32 percent, pay-off 26 percent and infringement of
ecological morals 20 percent (Vee of and Skitmore (2003).

A study about perception of American construction companies concerning corruption

and unscrupulous business practices in worldwide construction had been done by Azhar et al
(2011) and theyexposed that that debasement and deceptive business practices have
marginally decreased in the last five years, due to taking after strict codes of morals by a few
major universal temporary workers. In the same country Ray et al. (1999) did a poll study
and they found that the dominant part organisations back the utilisation of code and with the
right of withdrawal of delicate and declined spread valuing, offer shopping, and union
investment in tendering.

Moreover, an exploration was done by Rahman (2008) and uncovered that the most
well-known parts of dishonest conduct that are experienced by the experts are cordiality,
blessings, actuations, rewards, security of the earth, wellbeing and wellbeing and in addition
political and social behaviour. Then again, self-restraint, trust, obligation, interchanges,
uprightness, certain identity attributes, genuineness and responsibility are the most essential
qualities that a moral expert should have.

Tendering methodology is one of basic techniques in construction industry that

arrangement with moral issues shifting from the expenses caused by inadequate tenderers,
reasonable tendering practices and divulgence rights to the irreconcilable situations
revelation (Ray et al, 1999 and Uff, 2003).

Furthermore, Ehsan et al (2009) deals with the ethical issues existing in the Pakistan
construction sector through a comprehensive research done through questionnaires, telephonic
surveys and interviews with different stakeholders. According to the research, there is no single
person in the industry of construction who had not faced some level of unethical behaviour.
Through undertaking work past ability 15 percent, pay off 20 percent, bias 30 percent, uncalled
for behaviour 30 percent, strict principles 18 percent and superseding of review technique over

4|Page
contracting strategy 35 percent. Political defilement and remuneration is being managed directly
by various business gatherings and expert social orders far and wide. Past researchers such as
Azhar et al (2011), Olusegun et al (2011), Vee andSkitmore (2003), and Degn and Miller (2003)
suggested that the degenerate and dishonest practices in the construction industry can take
different forms but the following are the most widely recognised unethical practices:

1. Bribery: Non-money or money support to get something consequently or paying

bribes or providing incentives to the client’s representatives so they award the project
to you, or so they will accept work of a poor standard, or agree to approve variation
claims which are inflated or bogus. Sometimes contractors or clients pay bribes to the
authorities to ‘smooth’ the project approval process. Paying bribes leads to more
problems when the person receiving the bribe accepts it as standard practice,
demanding more and bigger bribes from other parties. Paying bribes reduces
productivity and increases costs for everyone.
2. Fraud: Deceit to obtain financial or other advantages
3. Extortion: A type of blackmail whereby one party threatens the other party of adverse
consequences unless the other party meets listed demands.
4. Bid Rigging: Unlawful conspiracy whereby competitors join to falsely raise the prices of
a bid. Contractors that ‘rig’ or fix prices. Usually clients invite a number of contractors to
price their project, with the expectation that the bidding or tendering process will be
competitive and the contractors will submit their cheapest possible price. Contractors
have been known to ‘organise’ these bidding processes. This could be done in several
ways, including all those pricing the project adding in a pre-agreed ‘losers fee’ which is a
fee that the winning contractor will pay to all the other contractors that priced the project.
A fee that the client actually, unbeknown to them, is paying. In other instances,
contractors pre-arrange who will have the ‘lowest’ price. Often this price is inflated, and
then the other contractors must ensure that their prices are more expensive than the
contractor who has the ‘lowest’ price. On the next project another contractor is provided
the opportunity to submit the ‘lowest price’, and so work is shared around amongst
contractors. This means that clients pay more for their projects, but it also results in
contractors becoming ‘lazy’, profits are easy to come by so there is little incentive to
improve productivity, save costs and work smarter. These contractors can find it difficult
to work in a competitive bidding environment.
5. Overbilling: Increasing unit prices for activities that are planned to occur earlier in the
project to raise the cash flow.
6. Change Order Games: Presenting a low bid in order to win the project and later on
get back the profit by presenting change orders.
7. Claim Games: Making additional earnings through presenting false claims.
8. Money Laundering: Moving assets or cash acquired by criminal activity from one
place to another, to hide the source of finances.

5|Page
9. Cover pricing: Happens when a bidder only wants to be seen to take part but never
wants to win the occupation so asks for an adversary for a reasonable "spread cost"
and shows it as a real offer. An organisation may have decent reasons to ask for at a
spread cost so it can present a solid offer including that: it might get dropped from a
delicate run-down in the event that it doesn't join in, or it might need capacity for the
employment yet need to pull in future occupation from the same important.
10. Not ensuring your project is safe. This includes making sure neither your workers nor
other people will be injured. To not care about a person’s well-being or safety is
unethical.
11. Giving the client a poor-quality project, or one that is defective. Frequently
contractors knowingly hide mistakes and poor quality work. In some cases these
defects have resulted in buildings collapsing, even killing people. Contractors have
signed a contract which binds them to delivering particular quality requirements and
specifications. To deliver less is, in essence, a form of theft.
12. Deliberately omitting items, or supplying products that do not conform with the
project specifications. Some contractors try and save money by purchasing
substandard materials. There are even reported cases of contractors not installing all
of the reinforcing in concrete structures, sometimes even removing reinforcing steel
after the work has been inspected by the client. Last year a building collapsed in an
earthquake, revealing the concrete foundations were filled with empty oilcans which
were used by the contractor to save concrete.
13. Not paying employees their agreed wages and salaries at the agreed time. These
wages and salaries should be above the minimum wages for the country and state, and
should also be a ‘fair’ wage.
14. Poor environmental practices. Both clients and contractors are guilty of dumping
hazardous waste in normal garbage. Some contractors dump construction waste in
vacant lots or in parkland. Oil and dangerous chemicals are knowingly dumped on the
ground or in stormwater drains. Contractors who carry out illegal environmental
practices probably engage in other unethical practices. Clients should ensure that they
and their contractors engage in good environmental practices. If we care for our
environment we are probably going to care for people. It’s about respect.

Conclusion
Being ethical is about how we deal with the client, how we deal with our employees and
how we treat our suppliers and subcontractors. It's about how clients treat their contractors.
Unethical behaviour can lead to a loss of reputation, which impacts future work. It can be costly
and contractors have faced lengthy legal battles and suffered large monetary fines for unethical
behaviour. It could even mean that contractors are barred from working for some clients. But
equally, clients need to be ethical. When clients have a reputation for unethical

6|Page
behaviour then contractors will avoid pricing their projects, or will add on additional monies
to their price to compensate for the problems they know they’ll have when they deal with the
client. Ultimately the client will be paying more for their projects. In the same way
contractors who engage in unethical behaviour with their subcontractors and suppliers may
also find it difficult to find suppliers and subcontractors to work for them in the future.
Contractors who mistreat their employees will inevitably find that productivities on
their projects aren’t what they should be, which costs them more. In some cases unhappy
employees have been known to deliberately damage equipment, materials and completed
work, or even steal from the project.
Ethical behaviour is about being honest and fair in all of your dealings. It means not
compromising safety or quality. It means complying with the conditions of the project and
paying what is due and fair. It’s about not profiting from someone else’s misfortune.

7|Page
References:
1. Alsweity A Y., “Unethical conduct among professionals in the construction industry”,
Master’s Thesis, the Islamic University of Gaza, (2013)
2. Azhar S, Selph J and Maqsood T., “Unethical business practices and corruption in
international construction:” A survey of American contractors working overseas. In 6th
Nordic Conference on Construction Economics and Organisation (p. 457) (2011).
3. Bloomberg, B., Cooper, D.R. and Schindler, P.S., “Business research methods” (2nd
European.) 2008.
4. CIOB, “Bringing them home, Report of the corruption in the UK construction industry”,
UK (2006).
5. Degn E and Miller K., Bid shopping, “Journal of construction education”, Vol. 8, No. 1, pp.
47- 55, (2003).
6. Ehsan N, Anwar S and Talha M., “Professional ethics in the construction industry of
Pakistan”, World congress on engineering, 2176(1): pp729-733 (2009).
7. Eyaa S and Oluka P., “Explaining non-compliance in public procurement in Uganda”,
International journal of business and social science, Vol.2, No.11, pp35-44. Fellows, R. 2003.
Professionalism
8. Gogulski, P., “Owners Delay of Payment on Change Orders Causes Serious Problems”. [Online]
Experts.com. Available at: http://www.experts.com/Articles/Owners-Delay-Payment-Change-
Orders-Causes-Serious-Problems-By-Paul-Gogulski [Accessed 3 Feb. 2017].
9. Hamzah A, Wang C and Yap X., “How professional ethics impact construction quality:
perception and evidence in a fast developing economy”, Scientific research and essays, 5(23):
pp 3742-3749(2010)
10. Hassim A, Kajewski S and Trigunarsyah B, “Factors contributing to ethical issues in project
procurement planning: a case study in Malaysia”, Proceedings of the 8th international
conference on construction and real estate management, Royal on the Park hotel, Brisbane,
Queensland, (2010).
11. Ho C M, “Ethics management for the construction industry, Engineering, construction
and architectural management”, 18(5): pp 516-537(2011).
12. JefferiesMand KirkA, “Ethical behaviour in the construction procurement process”.
Globalisation and Construction, p.941, (2004).
13. Mason J, “Ethics in the construction industry: The prospects for a single professional code
International journal of law in the built environment”, 1 (3) pp194-205(2009).
14. Matveev, A V, “The advantages of employing quantitative and qualitative methods in
intercultural research: Practical implications from the study of the perceptions of
intercultural communication competence by American & Russian managers.” Bulletin of
Russian Communication Association of Communication and Applied Communication, Vol.1,
pp59-67, (2002).
15. Miller, “Improve poor ethics in construction, set consequences”, Colorado real estate journal,
(2011).
16. Mishra, Pand Mitall, D “An ethical approach towards sustainable project success”, Procedia
– social and behavioural sciences 25: pp 338-344(2011).

17. Ogachi, J, “The status of the procurement profession in Kenya: baseline indicators”, Journal
of the association of professional societies in East Africa, Vol. 3, pp.1-34(2011).
18. Olusegun A, Benson O, Esther A and Michael A, “Corruption in the construction industry of
Nigeria: causes and solutions”, Journal of emerging trends in economics and management
sciences, Vol. 2, No. 3, pp156-159(2011).
19. Oyewobi L, Ganiyu B, Oke A, Ola-Awo A and Shittu A, “Determinants of unethical
performance in Nigerian construction industry”, Journal of sustainable development, Vol. 4,
No. 4, pp 175-182(2011).

i|Page
20. Patrick, Z, “Strategies for minimizing corruption in the construction industry in China”,
Journal of construction in developing countries, Vol. 11, No. 2, pp. 15-29(2006).

21. Pearl R, Bowen P, Makanjee N, Akintoye, A and Evans, K, “Professional Ethics in theSouth
African Construction Industry – A Pilot Study”, Journal of Construction Managementand
Economics Volume 25, Issue 6, pp 631 - 648 (2007).
22. Rahman, A B A, “Unethical conduct among professionals in the construction industry”,
Doctoral dissertation report, University Teknologi Malaysia (2008)

ii | P a g e
3|Page
4|Page