The construction industry is highly regulated by laws and codes that are intended to assure safe buildings.
Some construction industry professional organizations have adopted codes of conduct, and federal contractors are required to adhere to ethical standards.
But when it comes to ethics, no overriding, formalized codes or standards apply across the board.
The Construction Management Association of America formulated a 10-point code of ethical professional conduct based on four fundamental principles: ethical practice, professional excellence, responsibility to the public and client-centered practice. Members pledge adherence to these ethical standards:
1. Construction managers should be guided in all their relationships by the highest standards of integrity and honesty.
2. Construction managers should conduct themselves honorably, responsibly, ethically and lawfully so as to enhance the honor, reputation and value of the profession.
3. Construction managers should avoid conduct or practices that deceive the public or represent a real or perceived conflict of interest.
4. Construction managers should respect the rights of others and should not discriminate on the basis of race, color, gender, marital status, religion, national origin, age, disability or sexual orientation… .
5. Construction managers should have a zero-tolerance policy for any form of harassment including sexual harassment and bullying.
6. Construction managers should perform services only within their areas of competence and qualification.
7. Construction managers should contribute to the advancement of the program, project and construction management profession by using best practices, continuing their professional education and contributing to the development of the future workforce.
8. Construction managers should hold paramount the health, safety and welfare of the workplace and the public.
9. Construction managers should guide and aid in defining and meeting objectives for environmental sustainability and resiliency throughout a project’s life cycle.
10. Construction managers should ethically represent the best interests of the owner or client, as consistent with this code.
The American Institute of Constructors has a similar code, which also includes the duty to protect confidential information, keeping informed on new thought and development in the construction industry and refraining from “maliciously or recklessly injur[ing] … the professional reputation of others.”
Other professional associations, such as the American Subcontractors Association and American Institute of Building Design, have adopted model codes of ethics.
The Sarbanes-Oxley Act of 2002 required public companies to disclose whether they have adopted a code of ethics, but compliance is voluntary for private companies. Additional rules were promulgated later that require federal contractors to have business ethics and compliance codes in place.
But for the construction industry as a whole, “it’s up to those who have a strong ethical code to report anything that’s not right,” Ethical Advocate, an ethics hotline, compliance and training service, stated in a recent blog.
And it’s up to individual companies to set ethical standards and make sure employees adhere to them.
ETHICS EQUALS GOOD BUSINESS
Building trust and relationships through ethical practices not only is the right thing to do. but it’s good business, said Jim Johnson, president and CEO of GE Johnson Construction Co.
“The greatest value a commercial contractor has is its reputation,” Johnson said. “A good way to stain or tarnish your reputation is a breach of integrity or ethics. I believe that top management has to be the leader and driver of ethical behavior.”
Every industry has good and bad businesses, Johnson said.
“I believe it’s the power of the consumer that aligns toward and supports the ethical businesses,” he said. “It’s back on the reputation of that firm: Is that somebody that they want to do business with?”
And that principle also applies to the subcontractors with whom GE Johnson works.
GE Johnson has adopted eight core values that are key to its company culture: integrity, safety, relationships, ingenuity, collaboration, balance, enjoyment and excellence. The company includes a definition of integrity in its employee handbook that highlights adherence to moral and ethical principles, soundness of moral character and honesty.
“All of our employees go through a new hire orientation, and we spend half a day going through all of our values,” said Laura Rinker, GE Johnson communications director. “As we go into these values, we have conversations about how they all overlap and intermingle.”
And the company offers continuing education on ethics as well.
“The Daniels Fund has case studies on ethics,” Johnson said. “We use those case studies as teaching lessons and debates on, ‘what is the ethical thing to do here?’”
The company also draws upon classes on integrity offered by the Associated General Contractors of America, “but they aren’t to the depth that we would like to go,” he said.
GE Johnson doesn’t celebrate bad behavior, but “we will highlight [examples] to people and why that is not a long-term strategy, and what that makes the company look like five years from now.”
Enforcement of values and standards is crucial, Johnson said.
“If we have a repeat safety violation, we will suspend that person from employment for six to nine months, in hopes that they learn the lesson about how we go about safety,” he said. “It would be the same for any of our other values.”
Most construction activity is governed by contracts, Johnson pointed out, which cover big issues like fraud and bribery.
“That being said, the opportunities to shortchange those are many and great,” he said. “It could be giving a contractor work because you like him and he’s going to give you a kickback, or using a certain supplier because they will work with you on another job. So there’s a lot of implied ethical issues in our business.”
Furthermore, contracts don’t cover everything, said Ryan Klein, an attorney with Sherman & Howard, who specializes in construction law and serves as legal adviser to the Housing & Building Association of Colorado Springs.
But “doing what you’ve promised to do in the contract” is a bottom-line ethical basic, along with following building practices specified by local, regional, state and national codes, he said.
From there, “I think there’s common construction standards within the industry,” he said. “I think most of the contractors here in town do that on a regular basis. If you’re doing that, I think you’re meeting what somebody might quantify as construction ethics.”
State law covers some ethical gray areas.
“In Colorado, we have a trust fund statute that says, if a contractor is paid for the work of subcontractors and suppliers, he, she or it must hold it on behalf of those subs and suppliers,” Klein said.
Other implied ethical issues are covered by federal law.
“We teach our board members that people can’t get together and collude on pricing — that’s potentially an antitrust issue,” Klein said.
“We have a lot of great contractors in Colorado Springs,” he said. “I know plenty of builders who, even if it’s a minor issue that’s not covered by warranty, might just fix it. If you’re not doing that, you’re not going to be in business very long or do very well.”
Klein agrees that a company’s behavior doesn’t stay hidden from the public for long.
“Bad-apple stories make the news, and the good contractors aren’t going to use the bad subcontractors that had those issues,” he said. Customers will shun shoddy contractors as well, “so in that sense, it can be a kind of self-policing.”
Policing the “hailstorm contractors” who swarm into town after a bad weather event and contract directly with homeowners is more difficult, Klein said.
“They’re not part of our local building community,” he said, “It would be hard to put that on the other builders who have been here for years and decades. … At that point, you’re relying on the judicial system to work that out.”
Although building codes speak to how work needs to be done and don’t address ethics, it could be said that there is some overlap between ethics and building standards. In the construction industry, those standards are vital, because they govern work that, if done improperly, could endanger people’s lives.
“We are lucky and blessed in our area that multiple governments have come together to create one regional building department and one standardized set of building codes to make sure buildings are built safe,” Klein said.
The Pikes Peak Regional Building Department reviews construction plans for code compliance, issues permits and performs a series of inspections throughout the project.
“When the work is not being done in compliance with the code, we’ll inform the contractor of that and what needs to happen,” Director Roger Lovell said. “The building code also sets standards for the materials that need to be used, as do the plans and the design professional, depending on the type of project that you’re working with. So it doesn’t mean that we can substitute some substandard materials on a job.”
The department will reach out to a contractor with repeated violations and work with that contractor on understanding the requirements and what can be done to avoid further violations, he said.
“When we have violations within our licensing code, then that contractor can get brought before the licensing committee,” Lovell said. That might be a contractor pulling permits for an unlicensed subcontractor or starting work before permits have been issued.
Regional Building is not involved in the contract process — “That would be a civil issue outside of the department,” Lovell said — or in construction defects that appear later in a building’s life. Those, too, fall within the legal realm for redress.
Construction codes typically are revised and reworked every three years, Lovell said. Electrical and plumbing codes are adopted at the state level, and Regional Building acts as the agent that enforces them, along with the building code, mechanical code, energy code, elevator code and others.
“We work with the El Paso County Contractors Association, HBA and all the local organizations to make sure that everybody understands what the requirements are,” he said.
“The sole purpose of the Building Department is to ensure life safety,” Lovell said. “So that’s really our focus.
“We do get asked a lot, hey, how do I find a good contractor?” he said. “We can’t recommend any contractors or any professionals within the industry, but we always encourage people to do their own research, to do the due diligence, to check our website to make sure that that contractor is licensed.”
Regional Building sponsors classes and prepares handouts that help people know what to look for, Lovell said.
“The way we look at it, it’s a lot more beneficial to everybody involved to prevent problems from ever happening rather than fixing them down the road,” said Greg Dingrando, PPRBD’s chief public information officer. “That’s why we have more than 100 handouts and a lot of videos to help people the best we can.”
Dingrando said residents and contractors can access information through the Handouts and Forms button at pprbd.org.
“Our YouTube page has a number of helpful videos as well,” he said.