Professionalism and Ethics in

Construction Industry

1
 Definition of Ethics
Ethics:

 The standards that an individual or a group has

about what is right and wrong, or good and evil

 Is the study of standards of behavior which

promote human welfare
 Definition of Ethics
Morality:
Is a set of principles, or rules that guide us in our
actions
Is a belief concerning right and wrong, good and bad,
which can include judgment, value, rules, principles
and theories.
 Has to do with objective rules about especially
important human activities
 Definition of Ethics

Ethics and Moral

Morality – is concerned with conduct and motives,
right and wrong, and good and bad
character
Ethics – is the philosophical study of morality. The
study of systematic methods which, when
guided by individual moral values, can be
useful in making value-loaded decisions
 Definition of Ethics
Ethics and Moral
- A framework or an approach that helps us to study moral
elements and arrive at an acceptable course of action

Ethics and Morality are now used interchangeably

In ethics value denotes the degree of importance of some

thing or action, with the aim of determining what actions are
best to do or what way is best to live
 ETHICS IN CONSTRUCTION

Is ethics some thing complex?

Are the known moral elements controversial?

Aren’t the main moral elements supported by our

religions?
 Types of Ethics
1. Normative Ethics:
Concerned with criteria of what is morally right and wrong.
It includes the formulation of moral rules that have direct
implications for what human actions, institutions, and ways of
life should be like.
The central question of normative ethics is determining how
basic moral standards are arrived at and justified.
 Types of Ethics

2. Common sense Ethics:

refers to the pre-theoretical moral judgments of ordinary
people.
 System 1 thinking is our intuitive system of processing
information: fast, automatic, effortless, and emotional decision
processes.
 System 2 thinking is slower, conscious, effortful, explicit, and a
more reasoned decision process.
 Types of Ethics
3. Personal ethics: refers to the ethics that a person
identifies with in respect to people and situations that
he/she deals with in everyday life.

4. Professional ethics: refers to the ethics that a person

must adhere to in respect of their interactions and
business dealings in their professional life.
 Principle
The Eight Core Principles of Ethics

Integrity To be straightforward and honest in all professional and business

relationships

Objectivity To not allow bias, conflict of interest or undue influence of others to

override professional or business judgments
Professional Competence and Due Care To maintain professional knowledge and
skill at the level required.

Confidentiality To respect the confidentiality of information acquired as a result of

professional and business relationships unless there is a legal or professional right
or duty to disclose
 Principle
The Eight Core Principles of Ethics

Professional Behavior To comply with relevant laws and regulations and

avoid any action that discredits the profession.

Moral Courage To exhibit fortitude and determination to exert

professional skepticism, to challenge others who are behaving
inappropriately, and to resist the exploitation of professional opportunity for
private benefit rather than the public interest.
Respect for autonomy: Keeping the autonomy of colleagues and
stakeholders
Beneficence: We have an obligation to bring about good in all our
actions.
 Values and Morale Reasoning
Values are
• things of worth or are highly regarded
• things that we have as directions or as a guide lines.
• general principles to regulate our day to day behavior

Reasoning is the use of abstract thought process to think

creatively, to answer questions, to solve problems, and to
formulate strategies for one’s action and desired way of
being.
 Some Examples of Core Values

• Commitment •Environmentalism
• Optimism •Open-mindedness
• Respect •Consistency
• Fitness •Honesty
• Courage •Efficiency
• Education
•Innovation
• Perseverance
•Creativity
• Service to others
•Logic
Peculiarities/Unusual/ of Construction
Degree Corruption by Sector (Eth.)
 Health
 Education
 Rural Water Supply
 Justice
 Construction
 Land
 Telecom
 Mining
Peculiarities/Unusual/ of Construction
The three most corrupt sectors (world wide)

1. Defense

2. Extractive Industries

3. Construction
 Peculiarities of Construction
• The Construction Industry and its Reputation
• Susceptibility of the Construction Industry to misconducts
The Construction Sector is highly susceptible to mismanagement and corruption.
 Its heavily technical nature,
 Colossal/large volume of transaction,
 lengthy cycle of procurement
 inherited uncertainties in relation to cost and time, and
 vast spatial diversification (of project areas)
 Ethics and Professionalism
Occupation and Profession

An Occupational Group:

• Delivers important services

• Makes a commitment to serve the public

• Claims a special relationship to the marketplace, not merely in

the rough and tumble; distinguished from a trade.
Ethics and Professionalism
 Ethics and Professionalism
Occupation and Profession

An Occupation becomes a Profession when a group of

individuals sharing the same occupation organize to work in a
morally permissible way, or to work to support a moral idea.
 Engineers organize to provide infrastructure
 Doctors organize to cure the sick
 Librarians organize to promote access to information, etc.
Ethics and Professionalism (Occupation and Profession)
Profession - An occupation that requires acquisition and
application of a body of knowledge and technical skills.
Professional - a person who possesses a personal body of
knowledge and often long and intensive academic preparation,
which is recognized and valued by the market.
Relating to or belonging to a profession that is, doing some thing
as a job rather than as a hobby.
Ethics and Professionalism (Occupation and Profession)
Profession
• Group identity
• Shared education, training -- requirements for admission
• Special (uncommon) knowledge
• Knowledge used in the service of others’ positive social need
• Involves individual judgment, autonomy in decisions
• Adherence to certain values
• Penalties for substandard performance
 Professional Codes of Ethics
A code of ethics prescribes how professionals are to
pursue their common idea so that each may do the best
s/he can at a minimal cost to herself and those s/he
cares about (including the public...).
“A code is a solution to a coordination problem.” (Davis,
Michael. “Thinking Like an Engineer” pp.153-4).
 Examples of Codes of Ethics
 Ethiopian Consulting Engineers and Architects Association (ECEAA)

Code of Professional Ethics

 Regulation No. 102/2018 Addis Ababa City Government Construction

professionals Ethics Regulation

 Code of Conduct for Members of Construction Contractors

Association of Ethiopia
 Professionalism
Corruption Issues

Fraud – A deceit, trickery practice or breach of confidence

to gain some unfair advantage
– Unethical behavior, unlawful action
– Tampering or altering of documents used for
contractual administration of a project
Scandal – an action or event regarded as morally or
legally wrong and causing public outrage.
 Professionalism
Corruption Issues
Example: World Cup 2022 Bid made in 2010
• Construction of stadiums and the associated facilities
– Serious H and S issues (reportedly 6500+ died since 2010)
– ill-treatment of the workers from different countries
 Professionalism
Corruption Issues
Bribery – 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
 Professionalism
Corruption Issues
Categories of corrupt payments help to clarify further
the meaning of corruption
• Paying a person to do what it should normally do
• Paying a person to use its power or influence over others to
get some thing done by others
• Compelling a person to pay (extortion) through threats of
what will occur if the payment is not made
 Professionalism
Corruption Issues

Unfair Conduct
• Biased tendering evaluation system
• Shopping for prices after tenders are closed
• Agencies making conditions difficult for companies to compete

Showcases: 1) License Application

2) Compliant on Bid result (2 envelope)
 Professionalism
Corruption Issues
1. License Application
• Owner of a Company was alleged
• While the case is under court, the Company
applied for license renewal
• As a GM of the Licensing Authority, do you
endorse the request?
 Professionalism
Corruption Issues
2. Compliant on Bid result (2 envelope)
• A two envelope type Bid was floated for a road construction
project
• A Contractor who did not pass the technical evaluation (and
hence got back its financial envelope ) appealed to the
concerned Authority stating the financial difference with
the winner
• Being impressed by the financial difference, the Authority
opened the envelope and started investigation
• Do you agree with what has been done by the Authority?
 Professionalism
Corruption Issues
Negligence
• Failure to exercise the degree of care considered
reasonable under the circumstances, resulting in a
damage to other party
• To be negligent, the professional must have had the
ability but has disregarded the crucial importance of its
ability
 Professionalism
Corruption Issues
Conflict of Interest – Individuals should declare all possible
instances of potential
– Often it involves personal interpretation
of whether or not certain behavior is
commonly acceptable rather than it is
illegal

Showcase – Bid evaluation of Police Head Quarter (HQ)

Building
 Professionalism
Corruption Issues
Bid evaluation of Police HQ Building in DM
• Two envelope type bid was floated
• A Bidder requested for disclosure of the result for Technical
Evaluation (but was not allowed)
• For those who qualified, the Financial Envelopes were
opened.
• The total score difference between the winner and the 2nd
was very marginal (less that 0.5)
• The Contractor who ranked 2nd appealed. Is the appeal
reasonable?
 Professionalism
Corruption Issues
Collusion (not collision)
• Secret or illegal cooperation in order to deceive others
(ex. Bid rigging)
• Results in non-competitive Bid
Collusion can be:
• Horizontal (same stage of production)
• Vertical (supply chain)
• Explicit or tacit
 Professionalism
Effects of collusion
• Reduction in the number of available bidders
• Increase in bid price
• Possible quality compromise
• Negative Industry image
• Companies failure through unfair competition (*)
 Professionalism
Effects of collusion

Collusion (Bid Rigging) may assume the following forms

• Cover Bidding (too high offer or unacceptable terms)

• Bid suspension (withdrawal)
• Market sharing (Geographically, Institutionally)
• Bid rotation
 Professionalism
Effects of collusion
A few warning signs of Bid Rigging
• Same contractor is often the lowest bidder
• Contractors fail to tender they would normally be expected to
bid for, but continue to bid on other tenders
• Some contractors unexpectedly withdraw from bidding
• Some contractors always submit bids but never win
• The winning bidder repeatedly subcontracts work to
unsuccessful bidders
 Professionalism
Effects of collusion
To reduce Bid Rigging
 Encourage more bidders

Avoid unnecessary entry barrier

Work with Professional Associations
Trade Competition and Consumers Protection Authority
A Proclamation on Trade Competition and Consumer Protection
 Conflict of Interest
 Exercising judgment with special interest that
might interfere with you judgment.

Financial

Family

Prior relationship
 Conflict of Interest
You are an official in AACRA. Your husband / wife
has a construction firm. Do you agree to take part
in a bid evaluation where your husband / wife
participates? If you are a TAC member, what do
you do if you encounter such a case?
 Conflict of Interest
(Types of Conflict of Interest)
Nepotism: Nepotism is the practice of giving favors to relatives
and close friends in matters of hiring, promotion,
transfer, or termination.
Self-dealing: is an action taken by a corporate fiduciary for that
person's personal gain, rather than for the benefit of
the company. Examples including using corporation
funds as a personal loan, or buying company stock
based on insider information—which is also an insider
trading violation.
Excess compensation: Paying an employee in a position or
substantial authority excessive compensation serves a
private interest
Conflict of Interest (Ethical Concerns)

• Potential bias
• Perceived deception
• Loss of interest
Dirt in a gauge is a good example
Conflict of Interest (Solutions)
 Recusal (or avoiding)
 Disclosure (Sponsorship Example)
 Management (for unavoidable cases)
Cooling off period (after an attachment with a case
that has potential conflict of interest)
 Conflict of Interest
Is Conflict of Interest a Crime?

Case for discussion

• A Board member resigned from the Board.
• A few days after, the X-member applied for a Professional
(Consultancy) Service in the same Board. The plan for the budget
year was indorsed while he was a Board member
• Is there Conflict of Interest?
• Conflict of Interest is perception.
 Conflict of Interest
AACRA
Conflict of Interest in Force Account Projects
(Client – Consultant – Contractor Relationship)
• Quality of Work (quality of concrete retaining wall
along the road behind Michael Church; Sharp
angle along a turn
• Duration
• Cost
How are such variables controlled???
 Conflict of Interest
In its wider sense, Corruption falls under Conflict of Interest

Klitgaard’s Formula (1988) of Corruption

Corruption = Monopoly + Discretion – Accountability

Corruption = S + M + D – (A+T+E)

Where:
S = Self; M = Monopoly; D = Discretion;
A = Accountability; T = Transparency; E = Ethics
 Ethics and Value based Leadership
What is a Good Company?
 Reputation – A reflection of the values you hold dear
 Trust and Loyalty – To your customers, investors, employees, and the public
 Moral Compass – one’s values, i.e. code of ethics, Mission Statement, personal
values
 Be Accountable – Not just responsible leadership, but accountable to those you
serve
 Stewardship – What we do after we say we believe in the Mission Statement,
code of ethics, the values statement.

Do you believe in your Mission Statement? Did your entire staff internalize your
Vision, Mission and Values?
 Ethics and Value based Leadership
 “Reputation” is first on the list, and with good reason. It’s putting your
values into action and doing what you say you’re going to do.
 There are four moral principles for building a strong reputation:
 Put people first in decision making
 Have respect for individual human dignity
 Treat everyone fairly
 Be honest
 Ethics quotes

1. “ Disciple is the bridge between goal and

accomplishment” Jim Rohn

2. “ If ethics are poor at the top, that behavior

is copied down through the organization”

Robert Noyce
Thank you!!!