Wednesday, February 29, 2012

Does integrity have a chance in the construction industry?

Anthony Brabazon made a presentation at the Conference entitled “Does Integrity Matter?” The 2011 EBEN Research Conference was held at Chartered Accountants House in Dublin, Ireland, from Wednesday 8th to Friday 10th June 2011. The event was hosted by EBEN Ireland, a newly founded chapter and registered charity with three experienced business people as its founding directors, in conjunction with Trinity College Dublin Business School and Chartered Accountants Ireland.
Anthony Brabazon is a professional architect, CEO of ABA Architects and founder of  He served as Honorary Secretary in the Royal Institute of Architects of Ireland and sat for four years on their Professional Conduct Committee.  Anthony is known for his integrity in a construction sector not universally applauded for the highest ethical standards.
Anthony opened by stating that “Ethics is the oil that flows between business relationships to stop sparks flying.” He suggested that ethics are regulated by two policemen:
The first is the internal policeman or conscience, which may or may not be effective depending on how the conscience is informed and the second is the external policeman comprising Contracts, Regulations and Enforcement as well as the fear of reputation loss.
He observed the effect of regulatory failures with the quotation: “When the sentence for a crime is not carried out, the hearts of the people are filled with schemes to do wrong” and then noted that ‘light-touch’ regulation is not a recent development, as the quotation was taken from the Book of Ecclesiastes written by King Solomon a few millennia earlier!
Anthony then contrasted the construction industry with manufacturing where a tested product can be seen before purchase.  In construction the outcome, in most cases, is not seen until the end of the process, which raises the requirement for trust between parties involved in each project.  The architect applies professional judgement on matters of quality at each stage to get the end ‘product’. While construction may not be a precise business, it can be a fair business.
He then discussed a variety of ethical issues facing the construction industry.
Ethics of tendering Due to costs associated with preparing prices it is important in an open economy to limit the number of tenderers in a transparent manner.  He noted that the depressed economy has been exploited by some clients in casting the net too wide when seeking tenders.
Ethics of architects Until recently anyone in Ireland could call themselves an ‘architect’.  The title ‘architect’ is now protected after a long campaign, the final push coming after a TV documentary concerning a fake architect exploiting customers.  While the ‘function’ has yet to be protected the ‘title’ protection is a good first step.
Architects are independent of Contractors and operate under a professional Code of Conduct which outlines duties to the public, clients and the profession.
Ethics of contractors A number of issues arise with building contractors.  One is tax compliance and Anthony explained that  tax inspectors have started inspecting plant hire firms to build true profiles of contractors’ output compared to declared accounts.  Another issue is sub-contractor payments.  He said ethical relationships must pass down the line as payment delays can prove dangerous to sub-contractors. He cited the collapse in Ireland of a major main contractor which affected over 1,000 sub-contracting firms.  The final example was customer care which the industry isn’t always renowned for.  Anthony said clients know when they are being “looked after”… but it is a two-way street requiring fair behaviour from all parties.
Ethics of clients  Anthony discussed a number of ethical issues relating to clients of architects, the first being tax compliance and “cash” deals which he described as not only being ‘illegal and immoral’ but also ‘foolish as they remove legal protection in an attempt to save 13.5% value added tax’. Another issue is ensuring that projects are adequately funded, both for construction and for professional services.  This, sadly, is often not the case.  He also said a clarification of roles was required, especially when a first-time, non-expert client was engaging an architect.  It can happen that the client has unrealistic expectations of the architect’s duties, especially in the case where the building contractor fails to perform. Anthony said that ultimately a degree of trust was required between both parties, as he had already stated, the ultimate end product can be ‘invisible’ until the project is complete.
Anthony then proceeded to describe a range of new pressures which had arisen over the last thirty years ranging from the proliferation of new materials, technologies and regulations in buildings, the speed of procurement, a stripping back from full service levels and below cost tendering.  Whilst these issues affect professional architects around the world, he said a number of issues are particular to Ireland, some as a result of the construction industry now accounting for only 8% of the overall economy, a recent fall from around 25%.   More difficult economic times have resulted in a high proportion of work, notably residential and small commercial projects, being directly procured with contractors without professional advice from architects, engineers or surveyors.
The final issue Anthony discussed was the question of how professional architects view themselves – do they see themselves as stewards or owners?  He suggested that, if the answer was as stewards, they were accountable to someone else, but if as owners then they do not see themselves as accountable.  Employees of large firms like IBM or GM, BBC or NBC are like stewards and have their ethical behaviour guided and regulated by the ethics of their companies.  Small business owners are without this constraint. However, even without accountability fear of loss of reputation can be a compelling influence.
Anthony concluded with a photo of the Empire State Building in New York which he cited as an example of what ethical co-operation could achieve, even in difficult circumstances such as the prevailing depression in 1930. He included a copy of a note typed at the time whereby the project was described as having been completed in 21 months from inception of design to completion. Co-operation indeed, the very essence of business being conducted with integrity!