Professional Ethics: Avoiding Conflict of Interests - Term Paper Example

Topic: Lecturer: Presentation: Introduction Conflict of interest is a situation whereby neutrality is undermined while serving one or more parties in favor of personal interest. A public official may fail to adhere to his/her obligations and absolute duty to satisfy pecuniary interest thereby denying some of the party’s involved to have a fair application of the law. Conflicts of interest must be avoided; however it can become an issue for all professionals that work within industry managing tender selection and subsequently awarding. This report demonstrates through examples how conflicts of interest should be avoided. It outlines the implications of such behavior and also discusses professional etiquette. Implications of Conflicts of Interest Conflict of interest in the tender management industry is illegal and may lead to prosecution of individuals or companies that intentionally benefit from the conflict. It leads to award of tenders with total disregard of merit and hence some qualified companies may not have a chance to undertake the work that they are competent in. In most cases, tenders awarded on the basis of conflicts of interest eventually fail or the expected outcome is not realized. According to Worthington & Goldsman (1998), the success of a project depends on the sincerity of the involved parties to satisfy the needs of stakeholders. Conflicts of interests lead to the pursuance of individual benefits while ignoring public interest. The preferred bidder in such a process may quote low prices and eventually end up requesting for additional funding with excuses of high cost of materials or high inflation thereby increasing the cost of a project. Such bidders are to blame for many projects that have turned in to white elephants, yet there might have been genuine bidders who would have accomplished the work at a lower cost (Keyes, 2004). In an economy, companies that do not win contracts as a result of conflicts of interest may become bankrupt in the long-run (O’Connor, 2007). On the other hand, those that are awarded tenders due to their political influence end up having no competitor and therefore they relax in terms of quality standards. A significant loss is experienced in the economy with regards to the desired impacts of the project, while on the other hand such practices promote corruption. Oyer (2005) observes that conflicts of interest in the management of tenders in the Philippines have led to an economic decline that has seen the country being overtaken by Thailand despite of having been ahead of it in the last five decades. In the economies where conflicts of interest are pronounced, transparency and accountability are concealed from public scrutiny. To avoid the undesirable consequences of conflicts of interest, those involved in tender management should be thoroughly researched to establish if they are personal interests that may hamper the tendering process. Any relationship between the client and bidders needs to be investigated to thwart conflict (Gallagher, 2005). If a person in the tendering process is found to promote conflicts of interest, he/she should be disqualified from participating. In some instances when disqualification of a person is impossible, a conflict of interest can be managed through involving a third party to control the conflict. However, setting up of a code of ethics in tender management is the most significant tool to guide the tendering process. This is because if the code of ethics is adhered to, it can promote professional etiquette thereby preventing extra-professional affairs that may cause conflicts of interest (Ferrell & Fraedrich, 2009). Professional Etiquette Professional etiquette is a scheme of rules and principles that standardize social and professional conduct. In any organization, there are certain set of rules and behaviors that are recognized to have a positive influence on an organization’s strategic objectives. Each position in a bureaucratic organization is guided by principles that are endorsed by legal codes. For example, conflicts of interest are denounced by such principles. To avoid them, Keyes (2004) observes that the confidentiality of tenders needs to be maintained. Professionals involved in tender management are supposed are supposed to ensure that the cost of projects in the tender documents comes from the bidders who are supposed to be supplied with specifications only. Conflicts of interest may emerge if some of the bidders are informed regarding the estimates before biding (Gallagher, 2005). All the bidders should be granted access to the project site to ensure fairness in the process. Bidders should be presented with similar tender documents to buy, which should be endorsed by all the relevant authorities. Some professionals with conflicts of interest may deliberately eliminate essential information in some of the documents to prevent some bidders from getting clear information to assist them to bid correctly (O’Connor, 2007). It is also imperative for all the bidders to be informed on the deadline, place and method of tender submission. The tenders should be sealed and deposited in a common tender box rather than hand delivery to employees who are involved in tender management since this may create a loop hole for the development of conflict of interest especially if the bidder seeks help to win the tender. Inconsistent information by the clients with regards to questions asked by the bidders may confuse them and therefore a single point of information should be established for all the bidders to get information (Worthington & Goldsman, 1998). It is unprofessional for employees to open the tenders before the specified tender date. It is also unfair to consider late tenders after the deadline. All the bidders need to be accorded equal opportunity and fair treatment without favoritism. After opening the tenders, all bidders should be duly informed whether they succeeded or failed (Gallagher, 2005). Quality standards Management of tender selection requires adherence to quality standards to ensure that the desired value for money is accomplished. The tender documents need to highlight the quality standards of the particular project tendered for. It is important to establish selection criteria that guarantee quality and best practice (George & Weimerskirch, 1998). Nevertheless, the criteria should not act as red tapes to prevent emerging companies from bidding. The bidders can be valuated on the basis of relevant experience especially when the project involved is of high value. Under such circumstances, it is important to assess the capacity of the bidder based on past projects accomplished. A certificate of completion may be necessary to indicate that the bidder accomplished the previous project according to the laid down standards (Kemp, 2005). Apart from the convectional way of awarding tenders to the lowest bidder, it is also imperative to assess the bidders’ capabilities with regards to the task. This may involve evaluating the competency of the management that the bidder promises to engage in the project as well as other professionals and technical workforce. The capability of the entire workforce in relation to the project is a significant indicator of quality (Creech, 1995). The bidders’ resources reflect the magnitude of the project that a bidder can accomplish successfully. For example, construction work requires specialized machinery for successful attainment of the desired results. Conflicts of interest may hamper attainment of the desired quality standards if the bidders’ capabilities and resources are not evaluated. They need to be given a chance to market their brand through demonstrating the capacity to deliver good quality (Beecroft et al. 2003). The international organization of standardization (ISO) has eight quality benchmarks that are applied in 148 countries globally (Naveh & Marcus, 2004). It is important that these principles are entrenched in the tender management process to guarantee value for the money utilized. For example, ISO 9000 is based on certain basic quality management principles that can be observed to ascertain quality in projects. The first principle states that projects should be customer focused. The bidder that wins the tender is answerable to the organization that is the client and therefore needs to understand the project requirements and should endeavor to exceed the client’s expectations (Goldratt & Cox, 2004). The second principle is leadership whereby the people involved in the tendering process are expected to establish a rationale and direction. The leaders need to ensure that all stakeholders are involved in the accomplishment of the overall goal. Involvement of people is the third principle that seeks to ensure that the various capabilities of different people are utilized for the benefit of the industry. The tender management industry should not be left for a few people who might be interested in advancing their pecuniary interests. The fourth principle ensures that the end result is accomplished through a process based approach. Each activity as well as the relevant resources needs to be engaged through a systematic process to avoid wastage of time and money (Beecroft et al. 2003). The system approach to management is the fifth principle that seeks to integrate inter-related procedures in to a system to increase efficiency in the accomplishment of objectives. Continual improvement is the sixth principle that focuses on promoting positive change throughout the life of the organization. The tender management industry needs to be open to change for greater effectiveness (Creech, 1995). Factual approach to decision making is the seventh principle that emphasizes on decision making guided by acquiring and analyzing data leading to informed decisions. The eighth principle emphasizes the presence of a mutual relationship between an organization and its suppliers so that each can benefit from the resultant value. In the tendering process, a mutual relationship leads to customer satisfaction and financial gains for the bidder who also promotes brand equity through satisfactory work (Kemp, 2005). Conclusion Professionals who engage in conflicts of interest within the tender management industry need to understand that it is illegal and that they can be prosecuted. This practice leads to bankruptcy of the companies that do not win tenders while those that always win become reluctant with quality standards due to lack of competition. Researching about the people involved in tender management is necessary so as to avoid conflicts of interest. Observance of professional etiquette can help to avoid extra-professional engagements in tender management. Bidders need to be offered equal opportunity in the tendering process. Quality standards need to be adhered to irrespective of the prices of the bidders, meaning that it is not mandatory for the lowest bidder to win. The quality standards of the International Standards Organization can be significant in the maintenance of quality in the tendering process. References Beecroft, G. D., Duffy, G. L. & Moran, J. W. (2003), The Executive Guide to Improvement and Change, American Society for Quality Creech, B. (1995), The Five Pillars of TQM: How to Make Total Quality Management Work for You, Plume Publishing Ferrell O. C. & Fraedrich, J. (2009). Business Ethics 2009 Update: Ethical Decision Making and Cases, South-Western College Pub  Gallagher, S. (2005). “A strategic response to Friedman's critique of business ethics”. Journal of Business Strategy. Vol. 8 pp 106-111 George, S. & Weimerskirch, A. (1998), Total Quality Management: Strategies and Techniques Proven at Today's Most Successful Companies, Wiley Goldratt, E. M. & Cox, J. (2004), The Goal: A Process of Ongoing Improvement, North River Press Kemp, S. (2005), Quality Management Demystified, McGraw-Hill Professional Keyes, N. W. (2004), Government Contracts in a Nutshell, West Group Publishing Naveh. E., & Marcus, A. (2004), “When does ISO 9000 Quality Assurance standard lead to performance improvement?” IEEE Transactions on Engineering Management, Vol. 51(3), pp. 352–363. O’Connor, T. (2007), Understanding Government Contract Law, Management Concepts Oyer, D. J. (2005), Pricing and Cost Accounting: A Handbook for Government Contractors, Management Concepts Worthington, M. M., & Goldsman, L. P. (1998), Contracting with the Federal Government, Wiley Read More