Business ethics in the construction industry

By Priya Chetty on February 4, 2020

The conventional perspective of business ethics as per Kolb (2008) considers any business or decision as ethical if undertaken within the umbrella of morality and is within legal permissible arena. All the common practices that are morally permitted to be executed are considered ethical under conventional perspective. However,  Kolb (2008) contradicted this fact by highlighting examples of slavery which was though considered immoral but was practiced as a part of conventional business ethics.

Conventional approach of business ethics has been found to be more materialistic and approves of certain acts which might be immoral (Kasri, 2009). The study further avowed that the business organizations who abide by conventional perspective of business ethics focus on maximization of wealth of both the shareholders (mainly profits) and the stakeholders. This article reviews the concept of business ethics in the context of the construction industry.

Business ethics from the perspective of the construction industry

It has been observed that the overall construction industry resorts to ethical standards that are poor (Moodley et al., 2008). According to this study some of the very common unethical practices adopted within the industry are corruption, compromising on health and safety requirements and resulting in environmental degradation. This has also been acknowledged by Murray and Dainty (2009). According to them, the construction industry is not eager towards “developing a social conscience” (Murray and Dainty, 2009, p: 56). The study also highlighted the problem faced by construction companies owing to which they are unable to design a specific ethical code to abide. These problems are mainly related to dynamism of construction industry as well as changing demands of the stakeholders especially the clients. However to improve upon the current situation, business ethics in construction industry is inculcated to promote sustainable business practices (Pitt et al., 2009).

Ethical business practices and performance of building quality projects

The ethical practices in business to a large extent are positively related to the performance of building quality projects (Delgado-Hernandez and Aspinwall, 2008). In this article four primary ethical business practices namely, honesty, responsibility, accountability and transparency are discussed in regard to building quality performance in the construction industry.

Business ethics in construction industry
Business ethics in the construction industry

Honesty practices and their impact on the building construction industry

Honesty practices are a dimension for ensuring quality performance as within any industry including construction (Delgado-Hernandez and Aspinwall, 2008). Honesty is an integral aspect of work-place environment and culture which is mainly nurtured by the organisational management. It also influences the Total Quality Management (TQM) in the construction industry.

Honesty and integrity often scores over self-interest in business, including construction (Laan et al., 2011). Honesty and integrity of the project managers are to a larger extent responsible for the success of a construction project (Yang et al., 2010). In most developing nations, the construction industry is plagued by unethical practices comprising of dishonesty, bribery, fraud, negligence, conflicts and bidding issues (Love et al., 2011). Such unethical practices to a great extent have negatively influenced the quality of building performance, for which honesty and integrity are recommended.

In Malaysia, to curb corrupt practices and promote honesty practices by contractors, Construction Industry Master Plan (CIMP) was inaugurated in 2004 (Adnan et al., 2012). The CIMP in the year 2007 designed a ‘Code of Ethics’. The primary intention of this code was to ensure the contractors realize the significance of quality and thus perform honestly to meet the desired objectives.

Accountability and its impact in the construction industry

Reformation within the construction industry has been undertaken across all nations in the world not only to improve performance but also ensure quality building. Accountability like honesty is another ethical business practice that endows construction projects with higher performance of building quality.

Accountability works by formalising expectations of action or behavior, creating sanctions for failure, enabling trust, and providing the motivation and incentives to use resources efficiently and effectively.

Sohail and Cavill (2008, p: 731)

In the year 2002,  Federal Facilities Council and National Research Council in USA spoke about accountability as an important parameter in Post-Occupancy Evaluation (POE) of any construction project. POE has been identified as a process through which buildings are examined methodically and rigorously once they are constructed and used for definite time frame. According to these organisations with an appropriate and defined POE, it would be possible for design specialists and proprietors for being accountable towards building quality performance.

It is the professional ethics of the people associated with a construction project that makes them accountable towards their clients (Abdul-Rahman et al., 2010). The question of accountability is raised as these professionals deploy their own expertise and knowledge to deliver their clients with higher quality building. Contractors involved in a construction project are also responsible for accountability. Stakeholders in a project contradict each other owing to differing requirements, which affects the building quality performance. Adoption of an integrated mechanism, wherein all the stakeholders resort to professionalism and adopt ethical practices. It results in quality outcome through accountability.

According to Oloyede et al. (2010), in Nigeria the government has taken dedicated efforts to overcome quality issues arising due to lack of accountability of differing members associated with the construction industry. Specific norms and protocols related to town planning have been designed. Furthermore, it is mandatory for construction industry participants to abide by them. There are defined punishments which are stringent for those deviating from their accountabilities but yet owing to failure of political enforcement. Quality issues continue to occur in Nigeria and no one is found to be accountable for the same.

Responsibility and its impact in the construction industry

According to Mansfield (2008), for a professional irrespective of the field of operations it is important to keep the interest of the public in mind. This results in responsible behavior. It is this responsibility towards the society that motivates an individual even within the construction industry to align personal goals with those of the society.

A comprehensive approach is important to ensure building quality performance in construction industry (Delgado-Hernandez and Aspinwall, 2008). The design organisation for example is responsible for developing a quality design for ensuring building quality performance and the contractors on the other hand are entrusted with responsibilities to build a quality product. The management is responsible for developing a detailed policy framework related to quality. The employees are subjected to training and developmental activities in order to ensure that quality policy is observed. Through coordination and synchronization of responsibilities at differing levels, it would be possible to ensure quality building performance. Based on this analysis Delgado-Hernandez and Aspinwall (2008) recommended that for building quality in construction projects a three team combination should be adopted. These teams would be design team, construction team and implementation team. Of which the last team would be primarily responsible for acceptance of quality enhancement.

Oyewobi et al. (2011) in their research studied the Nigerian construction industry and affirmed the presence of unethical performances resulting in higher levels of corruption. This corruption was found to be a major source of discouraging adoption of governance and trigger a decline in trust of people. Thereby having negative implications on the social responsibility undertaken by members of any industry including the construction industry.

Transparency and its impact in the construction industry

Klotz and Horman (2007) had outlined the significance of transparency for delivering a project that is of higher quality and is sustainable. Construction projects are no different. Lack of transparency within the construction industry has been considered as one of the significant factors resulting in escalating corruption. This corruption is the main reason behind increasing death rates, environmental degradation, resources mismanagement and unfocussed usage and monetary losses experienced by the industry (Krishnan, 2009).

Nijhof et al.(2009) delineated four most important aspects related to transparency. These were namely:

  • responsiveness towards risks and costs,
  • determining the ratio of quality against price,
  • primary causes of rejecting or awarding a project and,
  • improvement in reputation apparatus.

The study concluded stressing upon significance on transparency within this industry especially between clients and performing parties as it results in quality building performance.

Highlighting the examples of Australia and Malaysia, Abdul-Rahman et al.(2010) had outlined the importance of transparency within the construction industry in both the nations. As per this study, there is a clearly postulated Ethics Code that ensures transparency is maintained within Australia’s construction industry. However, in Malaysia though transparency scores were very low indicating presence of higher levels of corruption there was complete absence of appropriate measures to enhance transparency. 

Promotional activities help spread awareness of ethics in construction

To ensure quality the construction project and corruption is eradicated and Oyewobi et al.(2011) recommended few approaches. These are:

  • transparency,
  • conduct code,
  • contribution by the civilian society,
  • safeguarding whistleblowers,
  • minimizing motives promoting corruption,
  • fight between rules of interest,
  • pacts for integrity and,
  • ineligibility and severe trials.

Thus, accountability, responsibility, honesty and transparency in the process of construction enhance quality of the projects. However, with the realization of relevance of ethical practices in improving the quality of the project, countries have focused on promoting the activities to minimize corruption and increase transparency, conduct of code implementation, and accountability. Hence, implementation of ethical practices in construction industry tends to enhance the quality of the construction project along with increasing the welfare of the citizens.


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Priya is the co-founder and Managing Partner of Project Guru, a research and analytics firm based in Gurgaon. She is responsible for the human resource planning and operations functions. Her expertise in analytics has been used in a number of service-based industries like education and financial services.

Her foundational educational is from St. Xaviers High School (Mumbai). She also holds MBA degree in Marketing and Finance from the Indian Institute of Planning and Management, Delhi (2008).

Some of the notable projects she has worked on include:

  • Using systems thinking to improve sustainability in operations: A study carried out in Malaysia in partnership with Universiti Kuala Lumpur.
  • Assessing customer satisfaction with in-house doctors of Jiva Ayurveda (a project executed for the company)
  • Predicting the potential impact of green hydrogen microgirds (A project executed for the Government of South Africa)

She is a key contributor to the in-house research platform Knowledge Tank.

She currently holds over 300 citations from her contributions to the platform.

She has also been a guest speaker at various institutes such as JIMS (Delhi), BPIT (Delhi), and SVU (Tirupati).