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Journal ArticleDOI

Accountability to Prevent Corruption in Construction Projects

01 Sep 2008-Journal of Construction Engineering and Management-asce (American Society of Civil Engineers)-Vol. 134, Iss: 9, pp 729-738

AbstractThe American Society of Civil Engineers claims that corruption accounts for an estimated $340 billion of worldwide construction costs each year. Corruption (including bribery, embezzlement, kickbacks, and fraud) in construction projects undermines the delivery of infrastructure services. Further, corruption poses significant risks to construction and engineering companies themselves. What progress has been made, therefore, in reducing the risk of corruption to construction projects? It is the purpose of this paper to argue that with improved accountability, attention to ethics and cultural considerations, and reduced corruption, it is possible to construct, operate, and maintain adequate quality and quantity of infrastructure on a more sustainable basis and thereby improve construction practice. This paper will demonstrate how accountability initiatives in construction projects in developed and developing countries can be of benefit internationally to the public and private sectors as well as nongovernmen...

Topics: Corruption (67%), Political corruption (63%), Accountability (56%), Embezzlement (52%)

Summary (3 min read)

Introduction

  • The construction industry has a world wide reputation for incidences of corruption, asset misappropriation and bribery.
  • Transparency International’s Bribe Payers Index (2005) repeatedly reveals corruption to be greater in construction than in any other sector of the economy.
  • The global construction market is worth around US $3,200 billion per year.
  • It is the purpose of this paper to argue that with improved accountability, attention to ethical and cultural considerations and reduced corruption, it is possible to construct, operate and maintain adequate quality and quantity of infrastructure on a more sustainable basis.
  • This will, thereby, improve construction practice by ensuring ‘capacity for continuance’.

Conceptual framework

  • This paper brings together a number of key concepts to develop a conceptual framework for analysing the issue of accountability in the context of construction.
  • The conceptual framework for this paper is a relational model based on a set of four concepts ‘corruption’, ‘cultural norms’, ‘ethics’, and ‘accountability’.
  • These concepts are then linked to a system of functions and behaviours: the system consists of awareness raising, strengthening professional institutions, prevention of corruption, and enforcement and monitoring measures.
  • The conceptual framework has been developed from the literature review and field research.
  • The conceptual framework will be used to review the links between accountability, norms, ethics, corruption and construction in practice, and to draw conclusions about the effectiveness of accountability in combating corruption in the sector.

Corruption

  • Corruption can be ‘grand’ (involving large amounts of money and taking place at the highest levels of society, and involving politicians, senior officials, political decision-makers, leading elites and major companies) or more commonly ‘petty’ (involving small amounts of money and which citizens may experience in their daily encounters with junior public officials such as policemen).
  • Most commentators focus on those who abuse their public office for private gain; whereas the bribe payers are often given less attention and sometimes depicted as innocent parties.
  • At least a dozen companies were found to have bribed the chief executive of the Lesotho Highlands Water Project (now serving a 12–year jail sentence for taking bribes), and the Lesotho courts have managed to gain convictions of a number of companies who were then debarred by the World Bank for their involvement in the scandal.
  • 31) suggests that corruption can in fact benefit private actors by putting “goods and services in the hands of people who value them the most, who use them the most”, also known as Klitgaard (1988.
  • It is argued that corruption is a significant barrier to economic, social and political development and poverty reduction.

Cultural norms

  • Different cultures have varying degrees of tolerance for corruption.
  • It can, therefore, be argued that corruption is not a cultural problem but an ethical one: for instance, no matter how pervasive bribery may be in some countries, no country openly defends the demand for, or the payment of, bribes as ethically acceptable.
  • Accountability Accountability works by formalising expectations of action or behaviour, creating sanctions for failure, enabling trust, and providing the motivation and incentives to use resources efficiently and effectively (Cavill & Sohail, 2005).
  • Creating demand for better services by changing levels of tolerance for poor service leading citizens to reveal their demand for better quality and more accountable infrastructure services.
  • This hypothesis will be re-examined later in the paper in the section ‘Reviewing the Conceptual Framework’ in light of the evidence presented in the following sections.

Corruption in infrastructure services

  • The construction sector is estimated globally to be worth some US$3,200 billion per year and some US $250 billion is spent annually on infrastructure in the developing world alone (Rodriguez, Waite, and Wolfe, 2005).
  • The table is also helpful in thinking about measures to address the problem.
  • The subsidiary Calcestruzzi (an Italian cement firm) of the construction materials giant Italcementi closed its operations in Sicily "as a sign of a refusal to submit to, or to show any compliance with" the Mafia, which extorts money from practically all public works contractors.
  • This is a key problem in the construction industry where corruption can be obscured by: Delays and cost overruns: sub-contractors may deliberately overstate the time and cost requirements (and falsifies time sheets) in order to achieve a higher price from the contractor.

Arrangements to combat corruption

  • The discussion that follows highlights a range of initiatives that have targeted one or another type of aspect of the conceptual framework as a way of controlling corruption in the construction sector.
  • 1 Awareness-raising: Corruption: Greater transparency can make a significant contribution to reducing corruption and embezzlement.
  • A survey by the Chartered Institute of Building in the UK (2006) examines how common corruption is within the UK construction sector and what the perception of that corruption is within the sector.
  • CCAGG ensure that project specifications and proper equipment requirement are delivered satisfactorily.
  • Royal Academy of Engineering has developed a statement of four fundamental ethical principles which engineers should achieve in professional life (accuracy and veracity; honesty and integrity; respect life, law and public good; and responsible leadership).

3. Prevention of corruption

  • Over the last decade, a number of theories and mechanisms have been developed and tested to prevent corruption in its various forms.
  • Individual, company or industry-specific codes of business conduct and professional standards are also key in corruption prevention, also known as Cultural norms.
  • It is a joint initiative between the private sector and civil society to create more transparency within public procurement, to allow the public to follow and monitor procurement of relevance to their community and to decrease the discretionary powers of public officials in this area.
  • Enforcement and monitoring measures: Corruption: First used in 1993, report cards use citizen feedback to rate the performance of public services agencies, such as the electricity board, water board, telecommunications, and public banks amongst others.

Reviewing the conceptual framework

  • This paper introduced a conceptual framework, developed from the literature review, to draw conclusions about the effectiveness of combating corruption in the sector.
  • This section brings together the framework and the discussed examples above.
  • The evidence presented in this paper suggests that successful initiatives to combat corruption through improved accountability have integrated both universal ethical principals as well as culture-bound attitudes and customs.
  • Many companies require contractors, subcontractors and third party agents like suppliers to be contractually bound to a company’s corruption and bribery policies and respect the same codes of conduct as other employees, i.e. not engage in any form of collusive or unethical practices and to act ethically, fairly and honestly.
  • These initiatives are intended to make tender procedures, procurement and project implementation more transparent, and ensure that construction management and procurement staff operate with less discretion, and that their actions are overseen and sanctions enforced if necessary.

Conclusion

  • The challenges of corruption in the construction sector are significant: corrupt practices, such as bribery, embezzlement, kickbacks and fraud, can occur at every phase of a construction project.
  • This paper has outlined a conceptual framework including examples of corruption in the construction sector, the rationale for applying greater accountability, provided a comparative examination of international good practice in the construction sector and examples of the application of ethics to construction sector.
  • Paper presented at the 11th International Anti-Corruption Conference Seoul, 25-28 May 2003.
  • DFID [Department for International Development] (2002) “Making Connections: Infrastructure for Poverty Reduction.” www.dfid.gov.uk/pubs/files/making_connections.pdf.

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1
Comment Response
Overall review
The author draws conclusions about the effectiveness of accountability,
but has discussed four items within the framework before, not just limited
to accountability. The terms used here need to be tightened a bit and all
parts of the framework need full explanations in regard to the examples of
fighting corruption
Done
The conceptual framework stands as a quasi-methodology better for the
paper, then follow that methodology through analysis and finally with
appropriate findings.
Done
Possibly strengthen the paper by proposing an implementation plan for
the framework identified. The paper gave no indicators of actually
applying the methodology
Done
Reviewer 1
Page 3, 4,5 – rethink the word sustainable – is it physical environment or
environmental issues
Sustainability
defined
Page 4: the second paragraph should also mention the section ‘reviewing
the conceptual framework’. The framework is the best vehicle for bringing
all the various definitional and concepts within this paper to a central
message… Expand this section as a set of findings in the literature based
on the framework outlined earlier. A table might be good for organisation
here.
Done
Page 5-9- the conceptual framework seems more of a set of definitions
and concepts that you are laying out to later apply to industry practices.
This framework does not tie all of the definitions together, though, and this
alone reduces its effectiveness. Please allow a part of the paper to tie in
all of the different elements of this section (at the end of section) that can
then be used for ‘reviewing the conceptual framework’ later
Done
Page 9 first paragraph Table is an afterthought here. The table is
interested and well-established and should be discussed more in the text
and applied to the conceptual framework
Done
Page 9- beginning of the second full para. Please list these items instead
of making one long sentence
Done
Page 10 – end of the first para – please expand on the final sentence - the
forms of corruption that is individual to the construction industry is
important for your argument and should be explained in more than one
sentence. Consider offering a paragraph to each form of corruption
Done
Page 11 – first full para – this example of awareness raising seems less
construction industry specific. Please provide better examples specific to
the industry in this section
Done
Page 12 – second para this section seems to be more awareness than
prevention
Integrity Pacts are
primarily aimed at
preventing
corruption
Page 16 – first full para this section seems more awareness than
enforcement
Para moved
Page 16 – last para – please expand more on this part as it is termed
critical
Done
Page 17 – second para – the author draws conclusions about the
effectives of accountability, but has discussed four items within the
framework before, not just limited to accountability. The terms used here
need to be tightened a bit and all parts of the framework need full
explanations in regard to the examples of fighting corruption. The previous
section titled corruption in infrastructure services and ‘accountability
arrangements to reduce corruption’ should reflect all the parts of the
Done

2
framework, not just selections.
Page 17: this section of the paper needs work to bring together the
framework and the discussed examples. This should be a findings section
that reinforces the methodology used and the analysis performed
Done
General note – the conceptual framework stands as a quasi-methodology
while the authors should define a methodology better for the paper, then
follow that methodology through analysis and finally with appropriate
findings. The lack of this methodology and process causes the paper to
meander a bit and not flow on certain points that are key to providing
valuable findings. This process needs to be defined and followed before
this paper can offer new knowledge on the subject
Done
Reviewer 2
Possibly strengthen the paper by proposing an implementation plan for
the framework identified. The paper gives no indication of actually
applying the methodology
Done
Page 6: first para – consider changing the word get in the last sentence to
gain
Done
Page 8: the last para change the word benefiting to benefit. Also the five
points listed in the section have no references associated with them. What
are these 5 based upon? Personal observations, literature or other
hypothesis?
Done
Include a section that provides recommendations for future research Haven’t included this
due to limited by
word count
The model needs to provide more evidence of how the recommendation
can work
Done

3
Title Page
Title: Accountability to prevent corruption in
construction projects
Authors: M.Sohail (ASCE member) and S. Cavill
Corresponding Author: m.sohail@lboro.ac.uk
Tel: +44 1509 222
890. Fax +44 1509 211 079
Contact: Department of Civil and Building Engineering, WEDC
Institute, Loughborough University, Ashby Road, Loughborough,
LE11 3TU, UK.
Audience: Practitioners and researchers.
Specialty area: Organizational Issues.
Subject headings: Civil engineering, ethics, construction
Types of Submissions: Technical Papers
journal-submissions@asce.org

4
Accountability to prevent corruption in construction
projects
Abstract
The American Society of Civil Engineers claim that corruption accounts for an estimated $340 billion of
worldwide construction costs each year. Corruption (including bribery, embezzlement, kickbacks and
fraud) in construction projects undermines the delivery of infrastructure services. Furthermore, corruption
poses significant risks to construction and engineering companies themselves. What progress has been
made, therefore, in reducing the risk of corruption to construction projects? It is the purpose of this paper to
argue that with improved accountability, attention to ethics and cultural considerations, and reduced
corruption, it is possible to construct, operate and maintain adequate quality and quantity of infrastructure
on a more sustainable basis and thereby improve construction practice. This paper will demonstrate how
accountability initiatives in construction projects, in developed and developing countries can be of benefit
internationally to the public and private sector as well as Non Government Organisations and researchers in
their efforts to reduce corruption in infrastructure services.
Keywords: civil engineering, corruption, ethics, construction
Word count: 6000

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Abstract: Critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies. Supporters argue that foreign aid can be used to reward good governments. This paper documents that there is no evidence that less corrupt governments receive more foreign aid. On the contrary, according to some measures of corruption, more corrupt governments receive more aid. Also, we could not find any evidence that an increase in foreign aid reduces corruption. In summary, the answer to the question posed in the title is "no."

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