The construction bid process can quickly break down if companies create their own rules for how the process should work. Unfortunately, it happens too often when companies try to cut corners to support their own interests, rather than the interests of all parties involved.
Why does this happen so often in the area of bidding? Historically, companies have attempted to justify certain practices – whether bid shopping, bid rigging, bid peddling, or eliminating companies from their list of approved contractors because they don’t play by their set of rules. The reasoning is to try to position the company for a favorable financial outcome.
These are forms of unethical behavior, but companies have been able to get away with this activity because much of it happens off the radar or behind the scenes. Certain information or practices could be hidden from view or withheld from key parties involved in a project.
It’s important to be able to recognize ethical issues involving the construction bid process so that you can take action. By speaking up, you will be doing your part to protect owners, partners, and the community, not just your company’s bottom line.
Example of Ethics in the Construction Bid Process
– Ethics in Construction Situation: Let’s say that you were just hired by a new company as an estimator. One of your first jobs in the new role was to work with the senior estimator to review an estimate for a small strip mall project. When you reached the mechanical portion of the project, your boss said that you could not use one of the bids you received that you thought was fairly competitive.
You were told that the submitting subcontractor was on your company’s “No Bid” list. Initially, you thought the list represented subcontractors that had previously not performed well for your company. However, you later found out that the list represented subcontractors that were considered to be “troublemakers” because they wanted to do everything “by the book.”
These companies point out issues with safety, hiring, and prevailing wage throughout each project, thus causing “trouble” for the company. The issue is that you still want to use the competitive bid from the “listed” mechanical contractor. How can you convince your boss that using their bid would benefit the company financially despite their “trouble-making” ways?
– Ethics in Construction Answer: The first issue to address is not whether you can benefit from the subcontractor’s bid, but whether your company’s list is appropriate. We can see barring someone because they do shoddy work or are unreliable. However, barring someone because they are concerned with job safety and meeting hiring and payment goals is simply unethical.
Our recommendation is to tell your boss that maintaining the list is unethical, that it could be considered discriminatory, and that your company could face legal action if word got out about this internal practice.
More importantly, this list will likely lead to your company developing a reputation of being unethical and not concerned about meeting safety and hiring requirements and goals. This presents an added risk that your company could be barred from participating in the bidding process until the list is eliminated.
Find Support Navigating Ethical Situations in Construction
It can be difficult to know what to do when confronted with an ethical issue in construction, especially if you’re in a different role or just joined a new company. There are countless things to think through as you weigh when to speak up, who to loop into the conversation, and how to deliver the message.
To learn more about this ethical issue and other ethical issues that affect the construction industry, we encourage you to become an AIC member. You can gain valuable knowledge from other construction professionals that have been in your same position working through the construction bid process and similar ethical situations.
– We also encourage you to subscribe to the AIC email newsletter. Drop your name and email address in the sign-up box at the bottom of this page to start receiving information about construction ethics directly to your inbox. We’re here to help you grow in your role.