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Topic; Understanding how managers on construction projects practice boardroom ethical governance, and what impact/influence this has on their employees and profitability
I would like to appreciate the following persons whom played a vital role guiding me during the period I was undertaking this research. Without them the research would not be a success.
I wish to appreciate the gusto and zeal that my parent has shown towards making sure that I pursue my education without financials problems. This has motivated me through the research period. Deserving a large round of applause are my lecturers whom provided guidance and support. I to congratulate my fellow students for helping me whenever I was desperate for their ideas. They play an integral role in this research project
The study aimed at investigating the impacts of ethical governance on profitability and employees in construction projects. This was achieved by providing answer to the three research questions which involved, What are the common unethical practices in the construction industry and factors which influence managers to carry these practices?;What are the impacts of ethical practices in construction projects to subordinate and profitability?; What are the suitable solutions to discourage unethical practices?
The research involved gathering data from 100 participants who represent the population working in the construction industry. Questionnaires, interviews, and secondary source of information were used to provide data relevant to the study topic. The data collected was tabulated then analyzed using excels to make meaningful conclusions.
From the study, it is evident that managers in construction industry engage in unethical practices. The most common practices, which were witnessed by the respondents, involved collusive tendering, frauds and dishonesty, bribery and kickbacks and negligence. The industry is characterised with complex and technical project requirements, long bureaucracy, uniqueness in different projects, complex project implementation structures , complex contractual structures, opportunities for overruns and delays, large number of suppliers to provide goods and services, various approval levels and permits and much of the work is concealed. This all characteristics present excellent opportunities for unethical practices. Unethical practices have numerous effects to the employees in this industry as well as the profitability. The negative effects of unethical practices, makes it important for the participants of construction industry to take effective measures to create an environment, which encourages ethical practices
Table of Contents
Ethics is a significant issue to all organization activities. The great pieces of literature developed on the importance of following ethical guidelines in business environment are a clear indication of its significance. However, much of the work concentrates on the procedures of developing a positive environment, with limited attention being paid to approaches to ensure that the individuals within the organization are following the codes of ethics. Gill, Séguin & Lapalme (2014) by summarizing the work of many others claimed that the ethical codes restate the moral ideals. Not at all times is always easy for individual to do what they know is right; thus adhering to moral ideals needs courage and integrity of convictions. As explained by Agnihotri and Krush (2015), it even proves more difficult for individuals to follow ethical codes which runs counter to their values.
Similarly, to other business, in construction industry there are human beings whose individual morality or personal ethics have a dominant role in influencing the procedure. People have come to realize that one of the consequences of unethical practices is reduced contactors fee and increased in cost during the procedure. Irrespective of the type of the unethical acts, their primary aim is conversing the organizational benefit to personal benefit, resulting to client incurring higher cost compared to that of formal standards in most cases.
Understanding how the managers in construction projects practice the board ethical governance is a complex endeavor. There a several factors that influences managers to go against the organization ethical guidelines. This study will primary focuses on the influence which ethical governance in construction projects has on the employees as well as the profitability of the organization.
The research will aim to answer the following questions
- What are the common unethical practices in the construction industry and factors which influence managers to carry these practices?
- What are the impacts of ethical practices in construction projects to subordinate and profitability?
- What are the suitable solutions to discourage unethical practices?
This study aims at investigating the impacts of ethical governance on profitability and employees in construction projects.
This study has the following objectives;
- Investigate the unethical activities as well as factors that influence the managers to carry them.
- Investigate the impacts of ethical practices in construction projects to subordinate and profitability.
- Investigate the suitable solutions to discourage unethical practices.
It is of great significance to comprehend how unethical decisions by the management influence the profitability of the organization and the employees. This understanding will be useful in predicting the benefits and cost brought by unethical practices. This research is therefore very significant to construction firms and the academic institutions. Through understanding the effects of ethical acts, organization will be able to adopt suitable strategies to discourage unethical acts. The learning institution will find the study beneficial to them because the research outcomes will help them adopt good strategies to train managers. Further, although there is a lot of research that have been conducted in ethical issues, there is no any of the researchers who have focused on the construction projects. This leaves much to be desired in this area.
The paper consists of five sections. The first section is the introduction, which provides the background of the research, statement problem, research questions, aim, and objectives and rationale of why the research is viable. Then the second section will highlight information on literature review, which is related to ethical issues in management. In the third section, the research methodology will be explained in details. This will include the research design, method of collecting data, target population, and how the study population was sampled. In the next chapter, all the data gathered would be tabulated then analyzed make useful conclusions. The last section will give conclusion and recommendation to the study. Limitation of the study will be addressed.
2.0 CHAPTER TW0: Literature Review
This section will present a deep analysis of the pieces of literatures that have been developed earlier by scholars and scholars, whereby they will be of much significance in getting answers to the research questions contributing to achievement of the study objectives. The section will be divided into subtopics. At the end of this chapter, the existing research gap will be identified.
According to Kalshoven, Dijk and Boon (2016), ethics entails conforming to the professional standards of conduct. Zuber (2015) expressed a similar idea where he claimed that ethics involves the moral principle, which governs conduct of a group or individual. Some time people tend to rationalize unethical practices defending themselves that is business but being unethical is not an approach of running business.
Lu and Lin (2014) by summarizing the work of many others claimed that profession ethics is a topic, which people should not take lightly because it influences professionals at working place. There is much work developed by researcher on procedure of code implementation as well as development but only limited attention has been pain of the people who should follow the code. To comply with the moral ideals it requires an individual courage and integrity of convictions.
The relationship existing between the individuals values and the code of ethics has been studied by examining the emotional reaction of successful staffs. According to the research conducted by Kalshoven, Dijk and Boon (2016), a code consists of profession collective conscience and it is a testimony to moral dimension reorganization by a group. If the code is not respected or is questioned, the collective conscience is lost. Therefore, it is significant to indentify the actual feeling on the factors, which determine the ethical code values.
Inferring from Weidman and Coombs (2016), ethics is a wide topic, which includes issues on quality of life, rights, and responsibilities, use of power, privacy, equity, and access and copyright issues. Zuber (2015) by summarizing the work of many others claimed that the goal of ethics is to bridge the gap, which exists between the two cultures, of human and scientific communities. Scientific advancement has raised new social and moral problems.
Cooper, Frank and Kemp (2015) claims that the word ethics was over used in 1990s but the concept was not. According to a survey conducted by Zuber (2015) 1998, it reveled that 57 percent of the staffs in construction industry acted ethically on the job. Currently, case of unethical practices has gone up. The names, Authar Andersen, global crossing, Martha Stewart, WorldCom, and even Eron invoke the notion of dishonesty and greed. The construction industry characterized by razor-thin margins, stiff competition, low-price mentality present opportunities for ethical dilemmas.
Inferring from Abdul-Rahman,Hanid and Yap (2014), for construction participants to think like professionals they must remember the ethical guidelines. Kalshoven, Dijk and Boon (2016) recommend that the same should apply to the construction managers who are perceived to have a special role in protecting companies financial well being. Engineers are assigned, engineering codes to protect the public.
Construction firms owe the public an obligation when it comes to safety and health matters. People working in the construction projects should consider their social responsibility in the organization objectives. A good example is engineers or managers in a construction project should give safety much importance as they give to profit. This implies that not at all time cost/benefit analysis should be given the first priority.
Duska (2015) in his work encourages the construction staffs to avoid looking at their role in construction activities as microscopic and consider the implication that their actions have to the society. Kalshoven, Dijk and Boon (2016) gave an example on the significance of giving the social responsibility over the law by mentioning ‘soldier of fortune gun for hire classified advertising case’. Advertising guns-for hire was not an illegal practice but it is immoral because people will die because of these guns. The law cannot shield people from the basic responsibilities all people owe each other, such as respect for life. Ethic and law is not the same thing; thus, one should not use law to justify immoral actions. Duska (2015) pinpointed the same arguments should also apply in construction management and design.
Although construction quality is a necessity, it means that when construction percipient is aiming to achieve creativity in their work, ethical corporate practices should be maintained. Inferring from Zuber (2015), engineers, and managers must hold public welfare, safety, and health thus they should skills and knowledge to enhance human welfare. When engineers, managers, contractors, corporate owners, inspectors, and subcontractors take responsibilities and pride in their work, the whole construction profession benefits. Ethical engineering practices affect public relations and engineering creativity positively.
Several studies suggested the engineers and the manager in construction firms are not only entitled with the responsibility of following the ethical guidelines but they should encourage their colleagues to follow the code of ethics. This can be achieving through ostracizing, calling to account and cruising those who do not comply with ethical guidelines. Brown and Bast (2015) outline several reasons why it is important for construction participant to observe the code of ethics. Following ethical guide will be useful in protecting themselves as well as their colleges whom they care. Further, encouraging ethical practices makes the working environment more conducive. It is through complying with ethical code one can avoid embarrassment, feeling guilty and shame. Finally, every profession has a fairness obligation when carrying his/her duties and responsibilities and the construction staffs are not exceptional.
Inferring from the empirical investigation conducted by Oladinrin and Ho (2016), on the behaviors and attitudes towards collusive tendering, it was revealed that only a few individuals would admit that they would practice collusive tendering under certain circumstances.
Chatterjee, Sarker and Valacich (2015) by summarizing the work of many others claimed that profession entails an occupation that requires mastery and advanced study in certain body of knowledge to safeguard or ensure a particular issue that greatly affects well being of other people. Every profession has its ethical codes, which serves as a framework of making good ethical choices. Professional ethics entails a norms and values, which deals with behavior and morality of professional on their daily activities.
Zuber (2015) suggested that the increasingly unethical behaviors in the construction industry are damaging its reputation. In construction, business there is widespread of fraudulent activities with engineering, construction, and manufacturing being among the most affected areas. Mismanagement, corruption, and poor governance in construction projects are highly affecting economic and social development.
Several studies suggest that there is various reasons why professional engage themselves in unethical behaviors. Among them are fierce competition, insufficient legislative enforcement, insufficient ethical education, complexity in contrition works, cultural changes and economic down turn among many others. according to the research conducted by Duska (2015), though ethical guidelines are put in place to guide some of the construction activities such as procurement, unethical practices are still evident, which results to lowering the quality of the project outcomes.
Governments in various nations have made efforts to curb these challenges, though their efforts have received criticism as inadequate. Authorities to fight corruption have been forged and introduction of ethical guideline to govern construction operations. according to the research conducted by Kalshoven, Dijk and Boon (2016), these ethical guidelines demands integrity and honesty in complying with the law and regulation, performing responsibilities, individual and society respect and realization of the significance of skills, quality, safety, environmental preservation and health.
Several studies suggest that in the construction industry unethical behavior take the form of conflict of interest, negligence, unfair conduct, bribery, fraud, and collusive tendering among many others. According to the research conducted by Agnihotri and Krush (2015), it was revealed that to maintain professional conduct in the industry, the client and public have a role to play. Duska (2015) expressed a similar idea where he claimed that they have an obligation in maintain professional conduct. Kalshoven, Dijk and Boon (2016) categorized unethical practices in construction industry in to the following types; conflict of interest, unfair conduct, fraud, bribery, and collusion.
In construction industry, they might be unfair business practices, unfair competition, unfair contract terms, and unfair labor practices. Most of unfair conduct is characterized with limited negotiation power and inadequate disclosure of important and relevant information. Whenever disputes arise, they are not a cheap, quick approach of settling them. However, if a suitable solving approach exists, some weak parties will be reluctance because the remedial action will not favor them. Kahrass, Strech and Mertz (2016) combined unfairness with dishonesty and argued that it comprises of illegal behavior, which is linked to fraud. Most of the practices, which are considered to be frauds such shopping for prices after tender closure and biased tender evaluation, involve dishonesty.
Conflict of interest
This involves situation where the construction participant are in a position of trust and they tend to have competing personal or professional interest. It mainly requires on to reason out whether a certain practices is commonly acceptable instead of whether if it s acceptable according to the law. In most of Industry, there has been secret understanding when two parties collude to gain for their personal interest. Pierce and Snyder (2015) indicated that collusion is an action, which is contrary to free competition principles.
Fraud and bribery
These are types of corruption. Reiley and Jacobs (2016) defined bureaucratic and political corruption, collective and individual corruption and corruption as a downward redistribution and upward extraction mechanism. The main types of corruption discussed were fraud, extortion, embezzlement, and bribery. At times, these concepts are interchangeable and partly overlapping.
According to Pierce and Snyder (2015) approaches towards preserving integrity and soundness of the construction companies must have a balance between legal mandates to make sure that these firms do no abuse their privileges. Such a balance is vital in making sure that structure of transparency and accountability are the core strengths. This explains why it is important to formulate principles of good governance and ethical conduct. Further, these principals should be practical and applicable in variety of organizations within the industry.
In construction industry, governance principle should encourage public disclosure and legal compliance. This involves implementing whistleblower and conflict of interest policies, which will guide companies, comply with legal obligations. To ensure effective governance there is a need to establish procedure and policies that the board should follow to accomplish it governance and oversight responsibility. Further, there should be policies to ensure wise stewardship of resources.
Schwepker (2015) argues that true professions have clearly defined ethical codes where the consequences and meaning of the codes are taught in learning institutions. There are governing bodies comprising of professional members who are charged with the responsibility of oversee the compliance. it is through codes of conduct, the professional institution are able to form implicit contract with other society members, trusting them to regulate as well as exercising jurisdiction over the occupational category. Bowen,Pearl and Akintoye (2007) claimed that on balance, with effective disciplinary institution, industry would be success on reducing misconduct.
Sojer, Kleinknecht and Henkel (2014) by summarizing the work of many others claimed that there are several effort that have been made over the previous years to increase integrity and ethical standards among professionals in various industries worldwide. According to Chryssides and Kaler (1993), construction management association of America has revised its ethical codes to include various professional services. In 2007, America society of civil engineers published ethical guidelines to govern the practices of America civil engineering profession
According to the research conducted by Friedman (1970), engineers and managers needs impartiality, fairness, honesty, equity, and they should be dedicated to health and safety protection. Warren, Peytcheva and Gaspar (2015) indicated that consultants in developing and developed nations are confronted with corruption hazards in their daily duties, especially in procurement. International federation of consulting engineers has forged guidelines to protect the industry from corruption exposure. The policy statement of FIDIC regards corruption as immoral as it breeds cynicism undermines society values and even demeans the person involve
Bowen,Pearl and Akintoye (2007) by summarizing the work of many recommended that when it comes to fighting corruption and unethical behavior in construction industry the importance of The Sarbanes-Oxley Act of 2002 (SOX) could not be denied. The Sarbanes-Oxley Act of 2002 (SOX) entails an act which was enacted in 2002 in response to the increased number of accounting frauds in early 2000s with the most famous being the Tyco, WorldCom and The Eron scandals. As explained by Kahrass, Strech and Mertz (2016), the firms operating in construction industry have an accounting department and the corruption starts from here. Accounting department is charged with the responsibility of making payments, sourcing funds, receiving payments and maintaining the financial records of the company among many others. These functions creates both incentives and opportunities for corruption.
The Sarbanes-Oxley Act of 2002 (SOX) provides provision for punishment for non-compliance, increased financial disclosure and internal audit certification. The acts require the company to include internal control reports in their financial reports. This will indicate that the financial data of the company is accurate and reliable as well as there are adequate internal controls put in place. Further, it has provision that protect the whistleblowe.
This section gives a description of the research design, which will be used in understanding how boardroom ethical governance is practiced by managers in construction projects as well as the impact of these practices on their employees and profitability. It will also describe the techniques used in selecting the sample size. Further, different methods used in collection of the data will be highlighted, together with the validity and ethical issues.
This study will use descriptive research design. According to Crane and Matten (2010) descriptive research entails a study where the aim objective of the research is to get the accurate portrayal of the qualities of groups, situation or persons. In this case, descriptive approach will be appropriate because the researcher will be able to gather accurate data on what happen in the construction industry and get clear pictures of the phenomenon. The approach will permit the researcher to consider various sources unlike other designs that limit themselves to one form of data. Karakhan (2016) claimed that the along with descriptive research design saving time and being less expenses, it can identify other areas for further study.
A set of well-structured questions will be administered to the participants to collect their views and opinion on ethical issues in construction industry. Questionnaire was seen as appropriate because of uniformity. Various respondents will receive identical questions and where the questions are closed, standardized answer will be provided. This approach of data collection, unlike others, it gives the respondents time to consider their responses. According to Gubler, Kalmoe and Wood (2015), questionnaire permits collection of large amount of data within a short duration a factor, which make them cost effective. further the responses gathered using questionnaire can be easily and quickly quantified , where the data will be applied in understanding the phenomena under the study. To save time and cost as well as increase accessibility the question will be sent to the respondent on emails.
Different respondents will be interviewed to give their view on the phenomena. Both telephone interview and face to face will be conducted. This will be determined by the location of the participant. Participants who the researcher will not be able to reach will be given phone calls while the others will be interviewed physically. Unlike questionnaire, interview assures the researcher that the answer is received from the intended person. Interview was seen to be appropriate because they allow the participant to give clarification on areas where there is misunderstanding. The researcher will be able to gather detailed data and get new insights.
Individuals who are in charge in the construction industry are self decisive and independent people working under strict ethical guideline which are established by senior management. At times, they have to make various decisions by themselves. Thus, it is extremely important to investigate their thinking and doing, to find solution to improve the procedure.
Secondary sources of data
Various secondary sources will be used to get data in aspects where the researcher will not be able to get first hand data. These will involves reports, books, journals, articles and previous researchers where important information on the topic under the study will be evaluated. Secondary sources save cost as well as efforts. Along with guiding to comprehend the problem studied, they also offer basis for comparison. Additionally, they are easy to access, as they require the researcher to visit libraries.
The study targeted individuals who are working in construction industry.
The study will use Probability sampling design where all the staffs in construction industry will equal chances of being chosen. Through giving the entire individual, an equal chance the probability sampling design reduces biases.
This research preferred to use random sampling to select the respondents. The approach was used mainly because of two reasons. firstly, it was viewed that random sampling will provide a convenience sample and given that there will be very few participants in the construction industry who will be willing to be investigated on their weakness choosing them randomly would be the most suitable selection strategy. Pre-test survey were undertaken to verify that the study would work as planned. The sample size will comprise of 100 individuals who work at construction industry at various levels.
This research will use bar charts and tables to illustrate and show the responses o f the respondent regarding and illustrate the respondents’ response, regarding how board room ethical governance is practiced by managers on construction projects as well as the impact of these practices on their employees and profitability.
The interviews were performed in free and open environment where every respondent was encouraged to freely express his/ her opinion. The questionnaires consisted of non-personal, unbiased and open-ended question. Where the questions were closed, standardized responses were provided. Up to date computers were used in data analysis where all the softwares and programs for research were updated before the commencement of this study. The secondary source of information used were readily available in the internet and library and comprised information that was consistent with others sources. For the books to be valid for the research, relevant authority was requested to authorize the different secondary sources of information used.
The research reliability was increased by conducting a pre-test using diverse individual samples and uniform testing procedures. A pilot group of 10 individuals was viewed to be relevant in testing the research instruments reliability. The research also sought views of lecturers who had adequate knowledge in this field. This was important in improving the content validity as well as modifying and revising the research instrument.
The information gathered from secondary sources will be scrutinized with an aim of determining its accuracy, adequacy, suitability and reliability. All the data collected will be tabulated in table, and then analyzed using bar graphs to give a conclusive answer. The data presentation and analysis will follow a qualitative and qualitative approach where by the information provided by participants will be analyzed critically. The study will mainly pay attention to ethics in construction industry where impacts of following or going against the code of ethics will be evaluated.
In this research, an invitation letter will be written to the participants seeking permission to undertake the research as well as gather data. Confidentiality will be assured to the respondent and the information that will be gathered will be used solely for this research. After tabulating the information from the original questionnaires, they will be destroyed.
The whole study will be undertaken ethically, in a manner whereby they will be no impeachment or alteration of the property rights of other publishers work. Before conducting the study, the researcher will seek the relevant permission from the appropriate authorities of the firms.
An assumption that the respondent will answer trustful and reasonability using their experience will be made. As such, the data, which will be provided, will be reliable and accurate to arrive to a conclusion and thus make recommendations. It will be also an assumption of the research that the respondent will base their answers on their opinions, knowledge and beliefs. Further, the study will assume that the research findings are accurate representation of the entire population.
This section provides the finding of the research. This will be presented under three subtopic. Firstly, the most common types of unethical behavior practiced by managers and the factors influencing them will be discussed. Secondly, a discussion on the importance of carrying ethical and observing code of ethics in the construction industry will be presented. Finally, views of different participants on the suggestion to curb ethical practices will be highlighted.
80 percent of the respondents revealed that the most common unethical behavior among the managers was collusive tendering. This involved where suppliers and contractors cooperated going against competitive binding and inflate the prices. It was found that most of the staffs who are involved in collusive bidding are those who worked in procurement department. These individual agrees with the supplier to submit high bid and they ensured that these suppliers win the bid irrespective of their prices being inflated. It was revealed that where there is collusive bidding unusual patterns are observed. For instance, in most cases, they are a group of suppliers who always win the tender and there is another group, which always looses every time. There is always wide variation on the prices attached with bids, which cannot be justified. Further, there is a continuous rise in prices of bid compared to prices and cost estimates of similar projects completed in the past. It was also found that at most time there are similarities different bids placed by different suppliers. This could be on the proposal submitted, calculations, handwriting, typeface, or even spelling errors. Collusive tendering involved bid-cutting, cover pricing, compensation of tendering costs and hidden compensation and commissions.
68 percent of the total population admitted that they have witnessed cases of bribery as the main unethical practices in the construction industry carried out by the senior staffs. This took form of cash inducements, favors, and gifts. It was found that the industry is prone to bribery because of its uniqueness. It is difficult to find two projects that are similar thus making comparison difficult. Payers in the industry take that advantage and conceal the bribes. in the industry the competition is limited thus over time the parties are able to create good relationship with the people who are responsible for making decision which increases the probability of an individual being involve in bribery.
Another common unethical practice that 60 percent of the of respondents claimed to have witnessed is negligence and fraud. Some workers provided poor quality of work, other could bid tender without the relevant requirements, and generally, the industry lacks safety standards especially on the sites. Others included inadequate and poor quality information, unfair treatments, and inadequate supervision.
Most of respondents gave example s of the fraudulent conduct, which they experienced in their companies. Among them, include covering materials of poor quality during inspections as well as poor workmanship, over ordering, interfering with signed documents, and using materials, which is not included in quotation. Theft of materials as well as time extension request was recorded.
70 percent of the participants had witnessed dishonest and unfair conducts. these mainly occurred in form of construct and design contractual arrangements, projects cost and consult fees, bureaucratic policy and tendering practices.
Tendering practices are believed to be unfair because of applying biased evaluation systems, shopping for prices, and re-tendering practices. Respondent were critical in the approach, which the business was conducted, especially on tendering policies.
The fee payment issue concerned participants who claimed the kit showed dishonest and unfairness for firm to fail to make payment to consultant after offering their services. The cost discrepancy, which exists in the industry, is a sign of unfairness. Overstating qualification and capacity to secure tenders was also mentioned.
It was a research objective to investigate what are the impacts of ethical practices in construction industry to both the subordinates staff and profitability. To achieve these participants were required to give their views.
The research revealed that unethical practices affected employees and profitability negatively. 76 percent maintained that unethical practices by the managers reduced the employee satisfaction and commitment. They felt that this is caused by lack of given fair opportunities. At times so that the managers can increase t heir earning in these construction companies they tend to reduce the cost associated with human resources. This includes salaries and benefits. It has been evident where managers are increasing the task that employees are required to complete; thus overloading them. Such acts demotivate the employees.
The participants also claimed lack of establishing or inadequate safety measures in the construction site directly affects the employees. This risks their lives considering the fact that these sites are highly prone to accidents. 78 percent argued that unethical practices reduced the trust, which employees have on their managers. This increases the rate of employee turnover and as well as reducing the ability to attract top performance.
Out of the total respondent 84 percent agreed that unethical practices have effects on both the short term and long-term effects on the company profitability. At short-term a contractor can increase the profit by bidding the highest price, and then reduce cost by offering low quality work, which is cheap. In turn, this damages the reputation of the organization to the general public as well as potential customers. This will reduce the long-term profitability because only a few customers will be willing to be contract the company. Most of the people prefer to work with organization, which adhere to ethical guideline. It was found that most of unethical practices by construction firms increases the cost incurred by the customers. Provision of low quality work at high prices reduces the profitability of the customer. Unethical practices also attract fines and penalties. This greatly affects the short-term profitability of the business.
The research aimed at investigation some of measures board governance should take to reduce corruption in the construction industry.70 percent of the respondent emphasized on increase of transparency in all the activities carried out in the construction procedure, especially procurement. This involved formulating clearly defined procedures, which should be followed in carrying out activities. Out of the total population 90 percent advocated that raising awareness is necessary. They felt that promoting transparency in the actions of the officials would demotivate them from engaging in corrupt transactions. this can be done by increasing the information that is available to the general public on contract arrangement, budgets, annual reports and financial statements. The public will scrutinize it identifying the areas of weakness, making it difficult for managers to carry out unethical practices.
Respondents admitted that to increase transparency in the construction industry disclosure is important. this can be achieved by following act that are passed with an aim of reducing corruption such as The Sarbanes-Oxley Act of 2002 (SOX). This act was enacted to improve financial disclosure and hence preventing accounting scandals. Along with dictating how corporation should disclose the financial statement, it defines the records, which should be stored by the IT department and for how long. The consequences of failing to comply with the requirement of The Sarbanes-Oxley Act of 2002 (SOX) is imprisonment and fines or both of them.
60 percent of participants maintained that professional institutions have a role to play when it comes to ethical practices recommending that they should be strengthened. These institutions control the conduct of the professionals. They should define ethical codes and ensure that due diligence in actions taken in the construction industry. They should emphasize on the fundamental principles of ethics, which include honesty and integrity, accuracy and veracity, respect of law, public goods and life and responsible leadership.
76 percent of the participant s felt that adequate supervision and physical audits on the site would solve the ethical challenges. Relevant measures should be put in place to ensure due diligence in surveying labor inputs, supervision and execution, and institute sanctions for non-compliance and effective enforcement procedures.
86 percent of the respondents claimed that there is need to increase board of governance ethics. The participants mentioned that a large number of companies in construction industry fail because of the failure of board of governance. following this, they should put effective measures to ensure audit are conducted effectively, disclosure of the financial information is accurate and reliable thus representing the fair value of the company, there is no conflict of interest and business practices are conducted fairly.
This section presents discussion on the findings, conclusion, and recommendation. The section will also provide limitation of the study and recommend other areas for further research.
From the study, it is evident that managers in construction industry engage in unethical practices. The most common practices, which were witnessed by the respondents, involved collusive tendering, frauds and dishonesty, bribery and kickbacks and negligence. This was a clear indication that there were number of professionals who were not observing the code of ethics. Scheiber (2015) by summarizing the work of many others claimed that one parties do not carry out unethical practices, quite a number of individuals have to participate to cover the information. Engineers, managers, suppliers, contracts and others employees are involved in this acts. This makes it very difficult for other stake holders to detect, because no one will be willing to review an issues which she/he is involved in.
The study identified the natures of the construction industry as the main cause of corruption. the industry is characterised with complex and technical project requirement, long bureaucracy, uniqueness in different projects, complex project implementation structures , complex contractual structures, opportunities for overruns and delays, large number of suppliers to provide goods and services, various approval levels and permits and much of the work is concealed. This all characteristics present excellent opportunities for unethical practices. For instance, limited regulations induce the participants to engage in frauds because they are aware that the probability of being detected is minimal. Additionally, if there are detected there are few action which will be taken against them or at time they go unpunished.
Unethical practices have numerous effects to the employees in this industry as well as the profitability. The research revealed that they increase the cost incurred by the client, in situation where the contractors inflate the prices to increase their profits. Though this increases their short-term profits, it affects their long-term profits since these practices damages the reputation of the constructing firms. Unethical practices reduce employee’s satisfaction and commitment. It was also revealed that these practices affected the trust of the employees on the managers, a factor that increased the rate of turnover and affected negatively the ability of the firm to attract top performers.
The negative effects of unethical practices, makes it important for the participants of construction industry to take effective measures to create an environment, which encourages ethical practices. These measures involve ensuring that there is adequate supervision and physical audits on the site, strengthening professional institutions and creating awareness to increase transparency.
The importance of code of ethics in construction industry cannot be overlooked. This raises the need of developing ethical construction culture and honesty. According to Kalshoven, Dijk and Boon (2016), regardless of how laws and regulation are good, participants in the industry are the root cause of unethical practices. People are the one who should ensure that construction operations are ethical, honesty, clean and healthy. Values, role models, visions, customs, slogans, social rituals can be used to set organizational moral tone as well as restricting corrupt practices.
A study recommends that further study should be conducted on the stakeholders should combat corruption in the construction industry. Further, it will be essential to carry research on how ethical culture should be created in the industry.
The study was constrained by the word limit. There was some aspect in the research, which were not fully discussed following the work limit. Time was also limited since the research had to undertake other academic duties while at the same time he was required to carry out the research.
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