Ethical Dilemma in Construction Industry for Ethical Practices

Question: Discuss about theEthical Dilemma in Construction Industry for Ethical Practices. Answer: Introduction Ethics says that a wrong thing can never be done in a right way. In the industrial world, an unethical practice has always ended up in a courtroom. One of the biggest scam on ethics happened with Enron in America in the last decade, for which the company ceased to exist. The construction industry in the world is also affected by unethical practices (Chalker and Loosemore 2016). A new study on the Survey of Construction Industry Ethical Practices has been found that, the people in this industry consider the unauthorized use of supplies and equipment, and improper reporting of the actual cost as the unethical practices (Parson 2014). The following report addresses the ethical dilemma in construction industry and its solutions. Ethical problems in construction industry The problem of ethics in the construction industry can exist in any step of the businesses, starting from bidding for a project to manage the supplies to delivering a final project. To maintain the loyal customers and the ability to gain and retain the customers is heavily dependent on the ethical practices by the company. The degree of integrity and trustworthiness in conducting business measures the ethical behavior of any construction company. Payment and bidding are two practices where the maximum instances of unethical behavior of the company occur (Abdul-Rahman, Hanid and Yap 2014). A construction project starts with either negotiation or open bidding for a project. In the government funded projects, there is always open bidding for it. During bidding, the constructors must estimate the cost of it, add the indirect costs and expected profit, and present a final expected cost. In this process, a company might get involved in unethical practices, such as, manipulating the cost to get the project. Sometimes two or more companies come together and determine the price to be asked. This eliminates the fair chance of others to win the job. In the bid shopping, a contractor takes the estimated bid from the subcontractor and suppliers and present in during the auction (Shapiro and Stefkovich 2016). Another highly unethical practice is that, many times, a contractor shows the bid of one subcontractor to the other in order to get a lower bid. It forces a subcontractor illegally out of the process. When this is found out, a contractor loses the trusts of the industry (Kelly 2014). Sometimes, in a bidding conference, one contractor may be able to see the bid of another due to poor quality of the specs. He then lowers its price to an unavoidable level and gets the job. Later on, he asks more money as extras. This practice is highly disregarded in the construction industry and the trustworthiness of the contractor gets lost (Wang 2013). Again, sometimes a construction company manages to get some inside information that helps it get an advantage in the bidding area. This is called smart bidding. In this the company knows something better than the competitors and gains the benefits of that. However, if the company gets the information from any insider, then it is an unethical practice to rule out other companies and this practice is considered as highly unethical. In this context, the above mentioned survey has found out that, 61% of the people believe that the cost of the projects gets affected due to unethical practices. It is also found that 58% people agreed that in the meetings, the discussion on ethics never come up. This seems to be the possible major cause of this problem. The survey has also found out that, 94% people consider the divulgence of solicited bids to gain advantage as unethical. However, the competition in this industry and the existence of bad practices force the companies to be in position, where they think about adopting this practice. However, according to James Gill, Jr., a lawyer and professor of construction law and ethics at Louisiana State University in Baton Rouge, the ethical practices in the bid shopping have different perspectives. What an owner finds ethical, might be unethical for the subcontractors (Parson 2014). During a house shopping, the customers always tend to go for the best prices; however, they are not concerned about the process of price determination. The suppliers also expect the customers to look around but the subcontractors do not want them to divulge their prices to other subcontractors (Chalker and Loosemore 2016). Solutions The construction companies should always follow the Code of Ethical Conduct of the industry. This code covers topics like policy statement, definitions, and standards of conduct on various aspects, such employment, safety, non discrimination, environment, antitrust policies etc. The antitrust policies include code of conduct on price fixing, bid rigging, claims, market division etc. (Neuman and Robson 2014) The people in this industry, i.e. owners, construction managers, general contractor, subcontractor, supplier and employees, all should follow the code of ethical conduct in the business. The penalties should be made more strict to discourage people to adopt the unethical practices. The ethical consideration is a relative subject. The principles of people direct the sense of ethics in life and business. Hence, the understanding of ethical practices differs. However, the companies should follow the general rules of ethics. They should maintain honesty and integrity, try to retain th e customers by maintaining fair practices, do not get involve in getting the inside information to gain an advantage during bidding and should refrain from indulging in any other unfair practices, which gets other contractors out of the bidding game. It would help the companies to maintain their trustworthiness in the industry and among the customers, which is beneficial in the long run for the business (Shin et al. 2015). Conclusion It can be concluded that, the construction industry has been affected by unfair practices for a long time. The rivalry in the industry is high and maintaining fair practices has lowered the profits of the construction companies. The need to survive in the industry and greed for profit has pushed the companies to adopt the unethical practices. However, to gain and maintain trusts and benefit in the long run, the companies should stay away from adopting the unethical practices. 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