How Ethical Issues Impact Profitability on Construction Projects

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Nov 24, 2024

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1 How Ethical Issues Impact Profitability on Construction Projects Student Name: Institution Affiliation: Course: Instructor Name: Date:

2 How Ethical Issues Impact Profitability on Construction Projects The construction industry is one of the most important sectors of the economy, contributing significantly to economic growth and development. However, this sector is often fraught with ethical issues that can impact the profitability of construction projects. As noted by Rashid et al. (2019), the ethical issues in construction projects can arise from various sources, including labor practices, health and safety concerns, use of low-quality materials, and corruption. These issues not only affect the financial bottom line of the projects but also impact the reputation of the construction company. In this essay, we will explore the ethical issues in construction projects and their impacts on profitability. This paper seeks to examine various examples of ethical issues that arise in the construction industry and how they affect the profitability of construction projects. The discussion will mostly focus on how not using talent that was agreed upon in the contract affect the profitability of construction projects. In a similar fashion, the discussion will also touch base on how sending senior project managers to the job site once in a while impacts on the profitability of construction projects. Finally, the discussion will delve on the effect of using low quality material and equipment on the profitability of construction projects. Being ethical establishes the tone of the contractual parties' association. When one party engages in unethical practices, the relationships begin to deteriorate, frequently causing the construction project to struggle. When dishonest behavior is exposed, confidence suffers. The other party is left pondering what other immoral behavior has gone unnoticed. To this regard, not using the talent that was agreed upon in the contract can have several impacts on the profitability of construction projects. The extent of these impacts can be discuss as follows. As noted by García de Soto et al. (2022), when a contractor fails to use the talent agreed upon in the contract,

3 it can lead to delays and cost overruns. For example, if a contractor fails to use a skilled electrician, it could lead to electrical problems that delay the project and require costly repairs. Reduced Quality is another impact of not using the talent that was agreed upon in the contract in relation to profitability of construction projects. As noted by García de Soto et al. (2022), failing to use the agreed-upon talent can significantly impact on the quality of the work in a construction project. For instance, if a contractor fails to use a skilled mason, it could result in poor-quality brickwork that detracts from the overall appearance of the building. In its simple form, not using the talent that was agreed upon in the contract is a breach of contract. If a contractor fails to use the agreed-upon talent, it could be considered a breach of contract. The client may be entitled to compensation, which could impact profitability. Failing to use the agreed-upon talent can damage a company's reputation. If a client is dissatisfied with the work, they may be less likely to recommend the contractor to others, which could impact profitability in the long run. According to García de Soto et al. (2022), failing to use the agreed- upon talent could result in legal action. The client may take legal action to recover damages or compensation for the breach of contract, which could result in legal costs and reduced profitability. In general, failing to use the agreed-upon talent can have several negative impacts on the profitability of construction projects. It can result in delays, cost overruns, reduced quality, breach of contract, damage to reputation, and legal action. To ensure profitability, it is essential for contractors to fulfill their contractual obligations and use the agreed-upon talent. Sending senior project managers to the job site only occasionally can have several negative impacts on the profitability of construction projects. The extent of this impact can be illustrated as follows. According to Lin et al. (2019), senior project managers are responsible for overseeing the entire project, and their absence from the job site can result in communication

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4 breakdown. If the project team encounters a problem or issue on the site, they may not be able to reach the senior project manager, resulting in delays and reduced productivity. Delayed decision- making is another main impact of occasionally sending senior project managers to the job site. Senior project managers are responsible for making critical decisions about the project. If they are not present on the job site, they may not be able to make informed decisions quickly, resulting in delays in the construction process. Senior project managers are responsible for ensuring that the work is being done to the required standards. If they are not present on the job site, they may not be able to monitor the work being done by the team, resulting in reduced quality control. According to Lin et al. (2019), if the senior project manager is not present on the job site, they may not be able to identify potential issues or problems that could result in increased costs. This may result in additional work being required, leading to increased labor costs and materials. Another major impact of sending senior project managers to the job site only occasionally on the profitability of construction projects is safety concerns. As noted by Lin et al. (2019), senior project managers play a critical role in ensuring safety on the job site. If they are not present, safety protocols may not be followed, resulting in safety concerns and potential accidents. This can result in legal issues, increased insurance premiums, and decreased profitability. In general, only sending senior project managers to the job site occasionally can have several negative impacts on the profitability of construction projects. It can lead to communication breakdown, delayed decision-making, reduced quality control, increased costs, safety concerns, and decreased productivity. To ensure profitability, it is essential to have a strong presence of project managers on the job site to monitor progress, make informed decisions, ensure quality control, and promote safety. This will result in a more efficient and

5 productive construction process, leading to increased profitability and a stronger reputation in the industry. Using materials and equipment that are of less quality can have several impacts on the profitability of construction projects. Some of these impacts include but not limited to increased costs. Using materials and equipment that are of less quality may result in the need for additional work and repairs, leading to increased costs and reduced profitability. For example, using low- quality paint may require additional coats or touch-ups, increasing the amount of paint needed and the cost of labor. As noted by Bertram et al. (2019), lower quality materials and equipment may not work as well as higher quality ones, leading to delays in the construction process. For example, using low-quality machinery may result in breakdowns that require repairs, leading to delays in the project schedule. Using materials and equipment that are of less quality can result in poor-quality work, which can lead to dissatisfied clients, legal issues, and damage to the contractor's reputation. Poor quality work may require rework, leading to additional costs and reduced profitability. Safety Concerns is another impact of using materials and equipment that are of less quality with regards to profitability of the construction project. Using materials and equipment that are of less quality may compromise safety on the job site, leading to accidents and injuries. This can result in legal issues and increased insurance premiums, impacting profitability. In addition to the above, using materials and equipment that are of less quality can lead to compliance Issues which may have significant impact on the profitability of construction projects ( Bertram et al., 2019). Using materials and equipment that are of less quality may result in non- compliance with safety and environmental regulations, leading to legal issues and fines, impacting profitability. Summing up, using materials and equipment that are of less quality can

6 have several negative impacts on the profitability of construction projects. It can lead to increased costs, delays, reduced quality, safety concerns, compliance issues, and damage to the contractor's reputation. To ensure profitability, it is essential to use high-quality materials and equipment that meet safety and environmental regulations, resulting in high-quality work and satisfied clients. In conclusion, ethical issues in construction projects can have significant impacts on profitability. These issues can arise from various sources, including labor practices, health and safety concerns, use of low-quality materials, and corruption. Failure to address these issues can lead to increased costs, delays, reduced quality, safety concerns, compliance issues, and damage to the contractor's reputation. However, ethical practices in the construction industry can improve profitability and create sustainable business practices. By prioritizing ethical practices, construction companies can create a positive work environment, increase client satisfaction, and build a strong reputation in the industry. To ensure profitability, it is essential to prioritize ethical practices and address any ethical issues that arise promptly. The construction industry plays a vital role in economic growth and development, and ethical practices are critical to ensuring the sustainability and success of the industry.

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7 References Bertram, N., Fuchs, S., Mischke, J., Palter, R., Strube, G., & Woetzel, J. (2019). Modular construction: From projects to products. McKinsey & Company: Capital Projects & Infrastructure , 1-34. García de Soto, B., Agustí-Juan, I., Joss, S., & Hunhevicz, J. (2022). Implications of Construction 4.0 to the workforce and organizational structures. International journal of construction management , 22 (2), 205-217. Lin, X., McKenna, B., Ho, C. M., & Shen, G. Q. (2019). Stakeholders’ influence strategies on social responsibility implementation in construction projects. Journal of Cleaner Production , 235 , 348-358. Rashid, I. A., Hamid, A. R. A., Zainudin, A. M., & Hatem, Z. M. (2019). Unethical behaviour among professional in the Malaysian construction industry. Proceeding of Civil Engineering UTM , 4 (1), 126-132.

How Ethical Issues Impact Profitability on Construction Projects

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