Module 4: Common types of corruption in project construction
A contractor lays a concrete floor for the project owner, but fails to install expansion joints in the floor as required by the contract technical specification. Rectifying this would put the contractor to additional cost, and would delay the project, therefore exposing the contractor to damages for delay. Under the contract, the project engineer is responsible for issuing variations. The contractor offers the engineer a bribe if he issues a variation to the technical specification which deletes the requirement for expansion joints. The engineer does so. No consequent adjustment is made to the contract price. The floor is therefore now in compliance with the varied technical specification, and the engineer accordingly issues a certificate of completion for the floor which entitles the contractor to payment for the flooring works. However, the floor is now more likely to crack and break up as a result of the absence of expansion joints, so the project owner has received an inferior product at the same price as the correct product. The project engineer incorrectly informs the project owner that the expansion joints were unnecessary.
The above circumstances constitute both bribery and fraud by both the contractor and the engineer. The acts of the engineer also constitute an abuse of power.
The engineer should only issue a variation to the contract technical specification if this in the best interests of the project owner, and there should be a consequent price adjustment to take account of any additional costs or savings. This variation is not issued for the benefit of the project owner, but in return for a bribe, and so as to protect the contractor from the consequences of its construction error. The facts are concealed from the project owner, who pays the full price for an inferior product. The circumstances should have been fully disclosed to the project owner, who could determine whether it wished to receive a floor which fully complied with the specification (which would therefore require rectification by the contractor) or whether it was willing to accept the defective floor (which would presumably only be in return for a price discount to reflect the project owner’s greater risk of incurring rectification costs later).
April 2025
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