Thursday, June 30, 2016

Identifying and Resolving Ethical Conflicts in Construction

The construction industry is the largest production sector in the U.S., with one out of every 20 people employed within the industry, yet a recent study of those in the field, including engineers, general contractors and subcontractors, found that 63 percent of participants felt the construction industry was “tainted by unethical acts.”

The Cromeens Law Firm, PLLC, employment and ethics lawyer, Christa Boyd, discusses some ethical issues surrounding the industry and a few preventive measures to help you stay in compliance.

Determining Contractor Qualifications

A good way to avoid ethical issues is to weed out questionable contractors in the pre-qualification stage. Often times, you may be unable to determine a contractors’ ethical practice prior to hiring them, but as a rule of thumb, try to minimize your pool of candidates to those who are members of an accredited organization, such as the America Institute of Architects or the Association of General Contractors. Additionally, consider requiring your chosen contractor to be bonded. Bonding refers to the ability of a contractor to get a surety bond to ensure performance in accordance to their contract obligations. If for some reason they are unable to get bonded, it is typically an indicator that the contractor either tends to default or is undercapitalized.

Ethical Issues in Bid Practices

Bid rigging is a form of fraud in which a commercial contract is promised to one party even though for appearance sake, several other parties submit bids as well. Types of bid rigging include bid suppression, cover bidding, bid rotation and kickbacks, among other forms. While bid rigging is a felony offense, it is still rampant in the construction industry. To help prevent this issue, consider casting a wider net and invite several qualified contractors or subcontractors from various areas to participate in bid selections. Train your staff to maintain accurate procurement records to track bids and be on the lookout for warning signs that good recordkeeping can reveal.

Bid shopping is the practice of divulging general contractors’ and subcontractors’ bids to their competitors in an attempt to pressure other contractors’ and subcontractors’ to submit even lower bids. While bid shopping is seen as unethical in the construction industry, it is not illegal and unfortunately there are few measure you can take to protect yourself from this practice.

5 Rules to Implement for Bidding

  1. Talk to more than one supplier
  2. Be objective and implement criteria (share this criteria to all suppliers)
  3. Do not share bid information with other suppliers 
  4. Do not allow anyone with financial or personal interests evaluate bids 
  5. Stick with rules the rules set forth in your solicitation for the bid

Discrimination and Harassment

The most common types of claims in the workplace are those of discrimination and/or harassment. As a business owner, you may not always have time to keep up with all employee matters, but it is important that your staff feels they have someone to take their problems to who does have the time to listen. Designate a trusted employee to oversee employee relations and have them document any claim or issue that comes their way. Treat any incident as a serious matter and take the time to thoroughly investigate any claim. If your company does eventually face a lawsuit, proper documentation of the claim investigation can go a long way to help your case.

As a final tip, the attorneys at The Cromeens Law firm remind you, if you don’t already have an ethics policy in place, be sure to write one and provide a copy for all of your employees. If you do have one in place, take some time to read over it and make sure it is up to date. Any changes or updates should also be communicated to your staff. Written ethics policies give you an added layer of support should you have a claim arise. Additionally, when in doubt, seek out guidance from an experienced employment and ethics attorney. Call The Cromeens Law Firm today for a free consultation.