14 April 2016

By KHEOH YONG SHEN

Synthesis of Ethical Issues in Construction Industry (Project Procurement and Organisation)

17.3% of 417 Malaysian contracts projects were considered "sick". Ethic in project procurement has been identified as one of contributors to project failure. Procurement is defined as the amalgam of activities undertaken by a client in order to obtain a new building. 

Figure 1 showing project procurement phases cycle where decisions that are made in plan procurement will influence the project schedule and are integrated with developing schedules in future. Ethic in the project management has been widely discussed by practitioners and researchers, one of focused areas is project procurement.

Ethics is not only about behaviour but includes thoughts, 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. Figure 2 showing ethical behaviour model in organizations.

In individual factors, personality variables have significant effect on ethical behaviour: ego strength, machiavellianism (cunning and duplicity) and locus of control (individual control on events affecting). Besides, the position of status also affect ethical decision: responsibility, power, and demographics (gender, personal beliefs, age, work experience, education level and background).

Ethical issues that occured in project procurement:

a. Issues of influence: negative influence by behaviours or actions (e.g. seller gifts, entertainment or outright bribes)

b. Perceived impropriety: unethical or compromising conduct in relationships, actions and communications.

c. Conflict of interest: personal or business that conflict with lawful interests of the employer.

d. Confidential and propriety information: violations of confidentiality

e. Reciprocity: improper mutual agreements.

f. Violations of law.

Factors contributing to ethical issues in project procurement:

1. Economic downturn.

- During economic recession, construction industry faced financial difficulties willing to do anything to survive, especially to get a tender or projects from the public sectors. 63% of respondents agree that construction industry is tainted by unethical acts. 

Case study: Due personal financial needs, a lecturer of Giat MARA centre was arrested by Anti-Corruption Agency (ACA) for alleged to have awarded his wife's company a tender by abusing his position as quotation analysis officer taking part in awarding the tender (Aliza, 2010).

2. National Objectives

- Under the Ninth Malaysian Plan (9MP, 2006-2010), there are ten mega projects with a value of billions of ringgit that need to be completed. These has caused pressure to construction players, causing ethical issues in project procurement as many contractors wanted to get tender by giving bribes, cronyism and nepotism. 

Case study: In 2004, a case involving Project Management Consultants with crony links with Malaysian senior officials and government leaders, won profitable contracts without competitive tender (Aliza, 2010).

3. Leadership

- Behaviour of top management is guidepost for acceptability of unethical behaviour in an organization. 

4. Non transparent selection process

- Failure to control bidding exercise is also causing unethical behaviour. To overcome the ethical issues in procurement, an organization should not only have a professional code of conducts but also to enforce and willingness of the whole organisation to commit the code of ethics.

Case study: The Public Works Department of Malaysia under siege for the multi-billion ringgit fiasco involving MRR2, the Matrade building and the Navy recruit training Centre. Today, the Matrade building not yet been completed and cracks at piling for MRR2. 

Conclusion:

Project procurement will determine the success or failure of the project implementation. Ethical issues will cause high risk to project completion. 

To resolve ethical issues, we identified the factors which involved not only personal behaviour but also organisation and external factors (goverment policies, economy, politics and social as well). Hence, it is not only the responsibility of individual but also the organisation and goverment in combating the ethical issues.

Architect as one of the player of construction industry, should keep the social responsibility as a profession and not merely a business entity that putting profit as priority. Therefore, Code of Conduct by Lembaga Arkitek Malaysia (LAM) is important for the organisation of architects as professional to self discipline for the interest of the public. 

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Reference:

1. Aliza A. H., Stephen K. & Bambang T. (2010). Factors Contributing to Ethical Issues in Project Procurement Planning: A Case Study in Malaysia. Available at: http://eprints.qut.edu.au/38648/1/c38648.pdf

2. Code of Conduct. Available at: http://www.lam.gov.my/index.php/code-of-conduct/architects.html.

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