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Construction Ethics

Construction Ethics. Training Program to Identify and Deter Unethical Practices. ENTER. Introduction. Program Purpose Ethical Transgressions Defined Program Format Overview Ethical Problems Identified Module Intro/Define/Quiz Program Quiz Completion. NEXT. Program Purpose.

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Construction Ethics

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  1. Construction Ethics Training Program to Identify and Deter Unethical Practices ENTER

  2. Introduction • Program Purpose • Ethical Transgressions Defined • Program Format Overview • Ethical Problems Identified • Module • Intro/Define/Quiz • Program Quiz • Completion NEXT

  3. Program Purpose • The purpose of this training program is to identify the top 15 industry defined ethical transgressions and learn how to avoid and eliminate them. NEXT

  4. Ethical Transgression • Ethical Transgression- • A violation of a law, command, or duty as it pertains to ones ethics or morals. • The action of going beyond or overstepping some ethical boundary or limit  NEXT

  5. Program Format Overview • Module Introduction • Introduction of Construction Ethical Transgression • Construction Ethical Transgression Defined • Module Quiz • Program Quiz NEXT

  6. Ethical Transgressions • The following research was conducted by Barbara Jackson of the California Polytechnic State University. In her study, she used a survey for contractors that identified the top 15 construction ethical transgressions. For this program, we will be using her findings to target which transgressions to define and try to eliminate. These include… NEXT

  7. Improper or Questionable Bidding Misrepresentation of Work Poor Quality Control Technical Incompetence Abuse of Company Resources Alcohol/Drug Use Failure to recognize or resolve subcontractor concerns Abuse of Client Resources Conflict of Interest, Improper Political/Community Involvement Mishandling Sensitive Information Failure to Protect Public Health, Safety, or Welfare Discrimination, Favoritism, or Harassment Misrepresentation of Financial Status or Records Failure to Protect the Environment Improper Relations with Clients, Contractors, etc. And the Winners are… NEXT

  8. Module 1 Engineers Uphold and Advance the… …Integrity… NEXT

  9. Issue Overview • Improper or Questionable Bidding • Frequency Rank- 1st • Seriousness Rank- 2nd • Key Form(s) of Violations • Low Bid Disclosure • “Idea” Shopping NEXT

  10. Improper/Questionable Bidding • Bid Shopping- • The practice of a general contractor who, before the award of the prime contract, discloses to interested subcontractors the current low sub-bids on certain subcontracts in an effort to obtain lower sub-bids • Forms of Violation • Low Bid Disclosure • “Idea” Shopping NEXT

  11. Improper/Questionable Bidding • Low Bid Disclosure • Probably the most common type of bid shopping, this method is employed by companies with the main purpose of driving down the cost • Subcontractors lose out • Quality of work is driven down • Strains contractor/subcontractor relationships NEXT

  12. Improper/Questionable Bidding • Idea Shopping • Taking different subcontractors ideas for construction and giving them to the subcontractor whom they would like to work with • Strains contractor/subcontractor relationships • Possibility of stolen “intellectual” property resulting in law suit NEXT

  13. Improper/Questionable Bidding • Solutions • Reverse Auctions • This method allows subcontractors to bid work on a real time website allowing all involved to see bids • This method levels playing field and lowers cost for contractors • Contractor uses “One bid = Lowest bid” policy, guaranteeing no bid shopping and subs. only get one bid NEXT

  14. Issue Overview • Misrepresentation of Completed Work or Value of Work • Frequency Rank- 2nd • Seriousness Rank- 15th • Key Form(s) of Violations • Completion of work claims • Improper material installed NEXT

  15. Misrepresentation of Completed Work or Value of Work • Completion of Work Claims • Most commonly occurs as front-end loading a schedule • Subcontractors claim more work is done than actually is completed in order to increase cash flow • Consequences • Straining of Contractor/Subcontractor Relationships • Subcontractors can leave job with money for work that is not completed • Project cash flow from owner can be disrupted NEXT

  16. Misrepresentation of Completed Work or Value of Work • Improper Material Installed • Value of work is inconsistent with construction documents • Building is not built to owners specifications • Consequences • Lawsuits from Owner/Architect/GC etc. • Project quality decreased • Safety hazards may result NEXT

  17. Misrepresentation of Completed Work or Value of Work • Solutions • CM/GC accurately charts work progress and pays accordingly • Subcontractors accurately report labor hours and material costs, if not a penalty is issued to them • GC/Subcontractors install materials properly and accurately to the contract documents • Owner/Architect/CM site tours to verify work completed and material accuracy NEXT

  18. Issue Overview • Poor Quality Control or Quality of Work • Frequency Rank- 3rd • Seriousness Rank- 4th • Key Form(s) of Violations • Workmanship Monitoring • Workmanship Methods of Installation/Materials Used NEXT

  19. Poor Quality Control or Quality of Work • Workmanship Monitoring • Responsibility of all personnel on site • Conflicts can develop between trades increasing cost of the project and delaying the schedule • Consequences • Lawsuits • Poor quality to owner • Bad reputation • Safety Risks NEXT

  20. Poor Quality Control or Quality of Work • Workmanship Methods of Installation/Materials Used • Coordination conflicts can develop between trades • Value is not consistent with construction documents • Consequences • Safety Hazards • Budget Overruns • Schedule Delays • Lawsuits • Owner dissatisfaction NEXT

  21. Poor Quality Control or Quality of Work • Solutions • Develop a series of quality control documents for frequently overlooked construction processes • Develop an on site quality reporting system for subcontractors (whistle blowing) • Give rewards for superior quality work NEXT

  22. Issue Overview • Mishandling Sensitive Information • Frequency Rank- 10th • Seriousness Rank- 12th • Key Form(s) of Violations • Disclosing Bid Information • Disclosing Owner’s Proprietary Information NEXT

  23. Mishandling Sensitive Information • Disclosing Bid Information • Directly related to bid shopping • Illegally reporting project data to gain a competitive advantage or to work with a given contractor • Consequences • Strained contractor/subcontractor relationships • Quality driven down • Contractors/subcontractors lose profit margin NEXT

  24. Mishandling Sensitive Information • Disclosing Owner’s Proprietary Information • Financial information of owner given to others • Classified information leaked to the public on government jobs • Consequences • Lawsuit • Firing of Contractor/Subcontractor • Security Risks • Bad Reputation NEXT

  25. Mishandling Sensitive Information • Solutions • Do not offer job/project to parties that disclose information • Remove responsible party from job • Publicly take responsibility for mishandling of information NEXT

  26. Issue Overview • Misrepresentation of Financial Status or Records • Frequency Rank- 13th • Seriousness Rank- 8th • Key Form(s) of Violations • Public Companies Accounting Practices • Falsifying Company Worth NEXT

  27. Misrepresentation of Financial Status or Records • Public Company Accounting Practices • Falsely reporting the companies financial position • Insider Trading • Consequences • Jail Time • Lawsuits • Investor loss of money • Bankruptcy • Folding of the company NEXT

  28. Misrepresentation of Financial Status or Records • Falsifying Company Worth • Done so company can get extra bonding capacity • Companies lie about how much work they have taken on or how much the company is actually worth • Consequences • Lawsuits • Fines • Bankruptcy • Folding of the Company NEXT

  29. Misrepresentation of Financial Status or Records • Solutions • Government Regulation • Sarbanes-Oxley Act • Act honestly and report numbers that are true. Remember, these laws are created to protect investors as well as companies. Overextending your bonding capacity can bankrupt your company if a project goes bad NEXT

  30. Module 1 Quiz The following five questions are used to review the previous quiz material. You must answer all five questions correctly to advance to the second module. GOOD LUCK! NEXT

  31. Question #1 The current outlook for your project is $300,000 over budget and you are looking for ways to trim budget. Your purchasing landscaping and the lowest bid came exactly what you have budgeted for. What is the most ethical action you can take to benefit everyone? • Purchase materials yourself and higher cheap labor to install • Resend the request for bid proposal with the lowest bid attached asking for lower bids • Contact all subcontractors and tell them all bids were too high and that an online auction for the contract will take place • Do nothing

  32. Question #1 The current outlook for your project is $300,000 over budget and you are looking for ways to trim budget. Your purchasing landscaping and the lowest bid came exactly what you have budgeted for. What is the most ethical action you can take to benefit everyone? • Purchase materials yourself and higher cheap labor to install • Resend the request for bid proposal with the lowest bid attached asking for lower bids • Contact all subcontractors and tell them all bids were too high and that an online auction for the contract will take place • Do nothing CORRECT! Providing a level playing field for all parties involved while still doing everything necessary to control the budget is the right ethical solution. NEXT

  33. Question #1 The current outlook for your project is $300,000 over budget and you are looking for ways to trim budget. Your purchasing landscaping and the lowest bid came exactly what you have budgeted for. What is the most ethical action you can take to benefit everyone? • Purchase materials yourself and higher cheap labor to install • Resend the request for bid proposal with the lowest bid attached asking for lower bids • Contact all subcontractors and tell them all bids were too high and that an online auction for the contract will take place • Do nothing WRONG Review: Improper or Questionable Bidding NEXT

  34. Question #2 Your filling out payment applications for your mechanical contractor. You notice on the sheet he claims 50% of ductwork is installed and wants paid for it. However you have just been on site and only the first floor of five has ductwork installed. You should… • Pay the subcontractor what he requests • Contact the subcontractor and ask for justification of his value. Decide on the correct value and pay accordingly • Suspend payment to the contractor until the following month for deliberately trying to deceive you • Make the subcontractor work around the clock until he has the value completed that he claims

  35. Question #2 Your filling out payment applications for your mechanical contractor. You notice on the sheet he claims 50% of ductwork is installed and wants paid for it. However you have just been on site and only the first floor of five has ductwork installed. You should… • Pay the subcontractor what he requests • Contact the subcontractor and ask for justification of his value. Decide on the correct value and pay accordingly • Suspend payment to the contractor until the following month for deliberately trying to deceive you • Make the subcontractor work around the clock until he has the value completed that he claims CORRECT! Asking the sub for justification allows for the proper payment amount to be reached and does not misrepresent any information to the owner. This is the most ethical and fair by far. NEXT

  36. Question #2 Your filling out payment applications for your mechanical contractor. You notice on the sheet he claims 50% of ductwork is installed and wants paid for it. However you have just been on site and only the first floor of five has ductwork installed. You should… • Pay the subcontractor what he requests • Contact the subcontractor and ask for justification of his value. Decide on the correct value and pay accordingly • Suspend payment to the contractor until the following month for deliberately trying to deceive you • Make the subcontractor work around the clock until he has the value completed that he claims WRONG Review: Misrepresentation of Completed Work or Value of Work NEXT

  37. Question #3 Mold is a growing problem in the industry. You are the site superintendent currently monitoring installation of the building’s brick façade. A satisfactory action to take to ensure that proper quality control is taking place would be to… • Walk around the site so workers feel the presence and perform properly • Create a document that quantifies the quality of installation and have foreman sign off on it • Delegate quality control to foreman • Have architect conduct daily site visits

  38. Question #3 Mold is a growing problem in the industry. You are the site superintendent currently monitoring installation of the building’s brick façade. A satisfactory action to take to ensure that proper quality control is taking place would be to… • Walk around the site so workers feel the presence and perform properly • Create a document that quantifies the quality of installation and have foreman sign off on it • Delegate quality control to foreman • Have architect conduct daily site visits CORRECT! The development of quality control documents will help quantify the quality of work conducted. This will help eliminate poor quality as well as arguments over responsibility for poor workmanship NEXT

  39. Question #3 Mold is a growing problem in the industry. You are the site superintendent currently monitoring installation of the building’s brick façade. A satisfactory action to take to ensure that proper quality control is taking place would be to… • Walk around the site so workers feel the presence and perform properly • Create a document that quantifies the quality of installation and have foreman sign off on it • Delegate quality control to foreman • Have architect conduct daily site visits WRONG Review: Poor Quality Control or Quality of Work NEXT

  40. Question #4 You are in charge of your projects finances. In a scope meeting with three subcontractors, you accidentally disclosed the bid of one of the contractors on a document. You should… • Apologize to the subcontractor and take complete responsibility for the error • Disclose the remaining bids to the other subcontractors • Select that contractor because you feel bad • Eliminate that contractor from the award process

  41. Question #4 You are in charge of your projects finances. In a scope meeting with three subcontractors, you accidentally disclosed the bid of one of the contractors on a document. You should… • Apologize to the subcontractor and take complete responsibility for the error • Disclose the remaining bids to the other subcontractors • Select that contractor because you feel bad • Eliminate that contractor from the award process CORRECT! The proper ethical move is to take responsibility for the error. This will show professionalism and build a better relationship with the given subcontractors NEXT

  42. Question #4 You are in charge of your projects finances. In a scope meeting with three subcontractors, you accidentally disclosed the bid of one of the contractors on a document. You should… • Apologize to the subcontractor and take complete responsibility for the error • Disclose the remaining bids to the other subcontractors • Select that contractor because you feel bad • Eliminate that contractor from the award process WRONG Review: Mishandling Sensitive Information NEXT

  43. Question #5 Your company is currently bonded to do $25 million dollars worth of work. Currently you are doing $22 million, but you are submitting a proposal for a $7 million job, putting you $4 million over your bonding capacity. This may result in… • Bankruptcy • Folding of the company • Lawsuits • All of the Above

  44. Question #5 Your company is currently bonded to do $25 million dollars worth of work. Currently you are doing $22 million, but you are submitting a proposal for a $7 million job, putting you $4 million over your bonding capacity. This may result in… • Bankruptcy • Folding of the company • Lawsuits • All of the Above CORRECT! All of the above are possible results of your company doing more work than it is bonded for. The ethical practice is to not falsify your company financial records NEXT

  45. Question #5 Your company is currently bonded to do $25 million dollars worth of work. Currently you are doing $22 million, but you are submitting a proposal for a $7 million job, putting you $4 million over your bonding capacity. This may result in… • Bankruptcy • Folding of the company • Lawsuits • All of the Above WRONG Review: Misrepresentation of Financial Status or Records NEXT

  46. Quiz Results • All Questions Answered Correctly??? Yes No

  47. Module 2 …Honor… NEXT

  48. Issue Overview • Failure to Protect the Environment • Frequency Rank- 14th • Seriousness Rank- 10th • Key Form(s) of Violations • Waste Control NEXT

  49. Failure to Protect the Environment • Waste Control • Environmental areas for protection: • Soil • Air Quality • Water • Animal & Plant Life • Control and manage waste products caused by the project NEXT

  50. Failure to Protect the Environment • Waste control • Problems • Waste enters soil, air, and water polluting and damaging the environment • Waste is not properly managed and builds up • Recycling is not conducted wasting valuable materials • Consequences • Lawsuits • Large Fines • Site Shutdown NEXT

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