Noname manuscript No.

(will be inserted by the editor)

Conflict of Interest Test Consultant Team in Design

and Build Contract

Nur Irdeana Izzanty Kamal ’Azam

Received: date / Accepted: date

Abstract There are many types of project delivery systems and one of the
common systems that had been widely used in construction is Design and
Build Contract. In this type of contract, there are several issues that are
commonly occurred and one of the issues is conflict of interest. This article
analyses previous cases on conflict of interest that occurs among consultant
team in design and build contract regarding any test that take place in the
construction. Several case studies were obtained as a reference to compare the
findings of the cases. Mostly, the case that is related to conflict of interests
could be avoided by the engineer. Engineer should avoid any assignments given
to them if there might be issue related to conflict of interests that could arise.

Keywords Conflict of interest · Construction · Consultant · Design and

build · Test

1 Introduction

In a construction industry, there are various options of project delivery systems

that could be chosen by the project owner and one of the options is design-
build. In other project delivery systems, the design and constructions are
separated into two different contracts while for design-build require only a
single contract which covers design and construction together. In this design
and build contract, there are a lot of crises arises related to the unethical action
of an individual and one of the most common unethical behavior is conflict of
interest. According to Paula Wells, Hardy Jones and Michael Davis, conflict
of interest could be described as any situation in which an engineer is in a

Nur Irdeana Izzanty Kamal ’Azam

Faculty of Engineering, University Malaysia Sabah, Jalan UMS, Kota Kinabalu, 88400,
Sabah, Malaysia
E-mail: deana1997@gmail.com
2 Kamal ’Azam

relationship with a client or employer requiring the engineer to perform some

services on behalf of that person.
There are two broad types of conflict of interest exist which are orga-
nizational conflicts of interest (OCI) and personal conflict of interest (PCI)
(Calore, 2012) Calore (2012). Typically, OCI happens due to other relation-
ship or circumstances that is faced by the contractor which causes the con-
tractor unable to render impartial advice or assistance to the government;
and/or the contractor ’ s objectivity in completing the contract task is or
might be prejudiced; and/or the contractor would have a biased competitive
benefit. According to The Federal Acquisition Regulation which is the princi-
pal set regarding government procurement in the United States, OCI might
happen due to biased ground rules, impaired objectivity and unequal access
to information. Contracts related to management support services; consultant
professional expertise; contractor performance of or assistance in technical
evaluations ; or System Engineering and Technical Assistance (SETA) work
made by a contractor that does not have overall contractual responsibility for
the development or production of the item are more vulnerable to OCI cases.
A contracting officer should assess a significant potential conflict in a contract
by examine each individual contracting situation according to the basis of its
particular facts and nature of the proposed contracts with good judgement
and sound discretion.
Meanwhile personal conflict of interest is commonly referred as “red flags”
that usually found in the work scope which related to the integrity of an
individual as a professional worker. PCI can be defined as a personal conflict of
interest in which a covered employee has a financial interest, personal activity,
or relationship that could affect the employee ’ s ability to act independently
and in the best interest of the government when performing under the contract
(Szeliga, 2012) Szeliga (2012). There are few examples of financial interest
that include in PCI rules such as compensation for business purposes, provide
services with exchange for honorariums, intellectual property interest and
investment interest. The misbehavior of the employee do not liable to the
contractor if the contractor have taken appropriate steps to reveal and report
the violation that occur.
According to The International Federation of Consulting Engineers
(FIDIC), conflict among consulting assignments are a ny activities or services
that might be in conflict with other assignments of the consultant shall not
be performed by consultants, including their personnel and sub-consultants
or any of their partners. However, the task might be done if only the possible
conflict that could possibly arise from this situation has been clarified and
resolved in proper way and is acceptable to the client throughout the pro-
curement and execution phases of the project. For instance, if the consultants
have been given task to prepare an engineering design for an infrastructure
project, the same consultant company is prohibited to prepare an independent
environmental assessment for the same project.
Conflict of Interest Test Consultant Team in Design and Build Contract 3

2 Methodology

Conflict of interest in construction industry is gaining a lot of interest from

global researchers. There are many journals and article that is published
to discuss the conflict of interest issues as this is the typical issue that is
happening in construction industry globally. Besides, there are also countless
of free access to court cases that related to the conflict of interest issue. Thus,
in this journal, the main method used to identify the conflict of interest test
consultant team in design and build contract is by reviewing several secondary
sources which are journals and several proceeding documents. In order to
obtain several related journals that is related to this topic, the keywords
used are conflict of interest, test consultant team as well as design and build
contract. The secondary sources are mainly obtained via relevant database
such as Science Direct, Springer and Google Scholar.

3 Result and Discussion

The results and discussion in this journal are made based on several few
cases found online from several official website. The cases chose to be discussed
are issues related to conflict of interest in construction industry specifically
conflict in test of consultant team in design and build contract. There are
three different cases that had been chosen to be discussed. The case would
be described in detail before any judgment is made together with a brief
conclusion and recommendation for the case.
The first case study was found from official web page of National Society
of Professional Engineers (NSPE) case number 04-9 entitled Conflict of
Interest-Engineer Inspecting Own Work. A professional engineer, Engineer
X, who is also a consultant for Contractor Y was required to inspect the
foundation which is suspected to had cracks that are visible to the local
building inspector. Engineer X performed the inspection for the contractor
since Engineer X ’s firm designed the house foundation for the Contractor
Y. Soon, Engineer X find out that the foundation had some minor surface
cracks which usually happen to that type of foundation, but the foundation
is considered structurally safe. After Engineer X submits report regarding the
results of the inspection to the building inspector, the building inspector replies
that he is not accepting Engineer X ’ s letter and request another engineer to
inspect the foundation. Ethically, the action of Engineer X is classified as
unethical behavior.
In this project, there is lack of disclosure in connection with any interest
that Engineer X might have had in connection with. However, there is no
evidence or prove that pointing out Engineer X is attempting to limit
disclosure or conceal any information from any interested party or
governmental agency. Besides, Engineer X is not performing other services
that is not declared. In approving or rejecting of engineering plans,
drawings and reports, and inspecting the contractor’s work some review
needs to be performed to determine if the works meet the code
requirements. As a design engineer, performing construction inspection
services within the scope of customary services for the benefit of the client is
one of the professional services that should be provided. However, in this
case, Engineer X is involved in the actual design of the house foundation
about which actual questions are raised up by the inspector. Engineer X
should not perform any inspection of foundation for the benefit of the party
that retained him as this issue is related to conflict of interests. In fact, an
independent engineer should be hired to perform the inspection as per
requested by the building inspector.
4 Kamal ’Azam

Next, the case study number 89-5 which is obtained from engineering
ethics transcription exercise uploaded in University of Pittsburgh official
website. In this case, there is a geophysical engineer, Engineer Z, who was
engaged by a construction contractor to conduct a field compaction tests in
association with work to be performed for the city of Downstream. At early
stage of the contract, the job specifications has declared that the contractor
would be in charge for retaining the geophysical engineer with consent of
the city engineer together with the frequency of the testing would be.
However, the contractor is facing financial constraint during the course of
the work, alleging that there is a lot of testing and that the soil borings did
not signify real conditions and request additional funds from the city. Two
years after Engineer Z’s services had already accomplished, the city brought
an arbitration action against the contractor. Then, Engineer Z agrees to
assist the city in developing a claim against the contractor as per requested
by the city. From ethical point of view, the inquiry is regarding to the
behavior of Engineer Z, either his act to provide claim services to the city is
ethical or unethical.
As a technical professional, engineers are frequently given task to make
significant judgements concerning the adequacy and the sufficiency of the
work being done by other parties during design and construction of the
project. According to codes of ethics, engineers are obliged to issue public
statements only in an objective and truthful manner to defend privileged
and confidential information of a client. There is a situation when an
engineer is requested to provide testimony as an expert witness or in some
other capacity for a party who has an interest which is in conflict with that of
the engineer’s future or previous client. In this situation, engineers have
ethical and legal obligation to provide honest, truthful and reliable
testimony. If the engineers fail to provide such testimony, they are under act
for violation of laws and Code of Ethics. In any similar situations, engineers
are not necessarily need to be agreed to participate in that legal proceeding
or disclose factual information which may bear upon the interests of a
future or previous client. In the Code of Ethics (Code III.4.b.) have
determined that without the agreement of all interested parties, it is
inappropriate for the engineer to take part in or represent an adversary
interest in connection with a specific project or proceeding in which the
engineer has gained particular knowledge on behalf of a former client or
employee. Thus, it is unethical for Engineer Z to provide claim services to
the city.
In contrast, there is also a case study that is considered as ethical due to
proper action taken by the engineer. The case study F-11: Conflict of Interest
in Building Inspection is obtained from ethics case study published in
Canadian Professional Engineering & Geoscience (Sixth Edition). In a small
town which is located in remote area of Canada, there is only one civil
engineer, Engineer A, in the area which has several experience working in
projects related to sewer and water, roads, bridges, structural design, as well
as building construction and inspection. On one fine day, suddenly an
earthquake had occurred in the area and causes severe damage to the
building. In that area, most of the building is built with unreinforced
masonry which had obvious cracks. In order for the authorities to allow
people to use the building again, an immediate structural inspection should
be done by the engineer. Engineer A has been assigned by the Town
Administration to undertake a contract for immediate structural inspection
of the damaged buildings. However, because of his wife owned four of the
building that requires inspection, he does not accept the contract due to
conflict of interest that might occur. The Town Engineer once again
persuade Engineer A to inspect other property that does not belong to his
wife. Turn out, Engineer A declined the offer once again as he is afraid that
if he condemned any of the buildings, he would still have a perceived
Conflict of Interest Test Consultant Team in Design and Build Contract 5

conflict of interest. This is because of his wife is in competition with other

owners for tenants and in this catastrophe he should assist his wife to
rehabilitate her buildings and could not place her behind other owners in a
similar situation. For the last time, the Town Administrator approach
Engineer A with concrete reasons due to emergency nature of the situation
and plus that outside help is unreachable due to damaged road conditions
and other engineers are in charge of other communities that are similarly
affected. Finally, Engineer A agree to performed the inspection on two of his
wife’s buildings and five others. He found out that the natural disaster
causes serious damages to all buildings he inspected.
Ethically, Engineer A make the best decision by trying to avoid a job that
would put him into a conflict of interest. However, he has no choice but to
accept the task assigned to him as other engineers are unavailable during
the crisis occur. According to the Code of Ethics, Engineer A performed this
duty as he is prioritizing the public welfare. Sometimes, there might be a
condition when conflict of interests is created by unavoidable circumstances
but as a professional worker, disclosing the issue might be the best action
that should be taken.

4 Conclusion and Recommendation

In conclusion, there are a lot of good and bad ethics that had been practice
in the real construction industry which some example for conflict of interest
had been clarify in this paper. As someone who is working in a professional
field, there are few things that should be measured before making a step or
decision. The short-term and long-term impact should be taken into
considerations to avoid any conflicts or issues rises in future. In order to
avoid any conflict of interest issues happen again, enforcement of law
should be performed in stricter and more transparent process. Besides,
integrity is the most important ethics that should be practiced among
individual who is working in a professional field. Without proper practice of
good integrity ethics, it will affect an individual future career development
as people around would loss trust in them.

Acknowledgements

It is my radiant sentiment to place on record my best regards, deepest

sense of gratitude to Prof. Ir. Dr. Abdul Karim bin Mirasa and Sr.
Asmawan bin Mohd Sarman as the lecturers for Ethics and Law course
for the help offered in order to complete this journal. The lectures and
guidance given during class helps me a lot to understand the topic of
study better. I will use all the skills and new knowledge that I had
learned during the progress of making this journal to help me in my
future career development.
 6 Kamal ’Azam

References

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