and Suggestions for its Mitigation and Elimination Including the Use of Enterprise Risk Management
FEATURED PAPER
By O. Chima Okereke, PhD
Nigeria & UK
According to a paper published in January 2017, entitled: “Why is Construction so Prone to Corruption?” by LetsBuild, a large software company in the construction industry, the total global construction market was estimated as $3.2 trillion per annum [1]. It was claimed that losses to corruption in the industry amount to 10-30% of the total market revenue.
Construction industry has been identified as the most corrupt sector in the world. Transparency International describes construction as an industry with characteristics that render it prone to corruption. It occurs in various manifestations in business, economics, politics, etc., it is blamed for most things that are badly handled in the industry. Whenever there is a failure of a public project, the first reaction is to suspect corruption as the reason for it. This is the assumption even before the failure is investigated. According to Transparency International, corruption could be defined as “the abuse of entrusted power for private gain” [2].
When talking about developing countries, corruption is a term that appears as one of the factors responsible for the apparently enduring underdevelopment. It is certainly the case that the construction industry is one of the industries where corruption features unhelpfully. Sadly, Africa has suffered a lot at the hands of corrupt individuals and organized crimes. Some companies for instance, allegedly pay top African government officials to receive tenders which have brought the construction industry into disrepute [3]. However, there are examples, cited in this paper, that make the point that corruption in the construction industry is a global affair and not confined to one continent.
In preparing this paper, a graphical representation has been produced of Circles of Corruption in the Global Construction Industry. The essence of preparing this network of circles of corruption in the global construction industry is to present the problems at a glance, that is on a page. It is hoped that the graphical presentation should make an impact on the reader who could be a project team member, a project manager, a project director or any other project stakeholder. An impact that could help elicit an interest in trying to eliminate some of the problems. It is thought that summarising the corrupt practices and failings may help to underscore the enormity and global spread of the problems which respect no geographical boundaries or national advancement in technological development. As will be seen with examples, corruption shows its unacceptable face in various forms in developed and underdeveloped nations alike.
In the first section of this paper, a graphical presentation of the circles of corruption in the global construction industry is given. Some examples of where they occur are discussed with reasons why they thrive. Suggestions for their mitigation are made in the second section while the use of Enterprise Risk Management is recommended in the last section.
Some examples of Circles of Corruption
Circles of Corruption and some reasons why they thrive in the construction industry
- Inflation of costs: The industry produces large infrastructures which are capital intensive. The greater the size of the fund, the greater the chances of inflation of costs.
- Corruption from the uniqueness and complexity of large projects: Large projects are generally unique such that there are unfamiliar areas which may be exploited for illegal personal gains. In addition, there may be hundreds of contractors engaged; interactions are so many that they constitute avenues for corrupt dealings. Besides, the companies may have multiple job sites, numerous employees, and multiple suppliers such the owners may not be able to monitor and regulate them [1].
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How to cite this paper: Okereke, O. C. (2020). Circles of Corruption in the Global Construction Industry and Suggestions for its Mitigation and Elimination Include the Use of Enterprise Risk Management; PM World Journal, Vol. IX, Issue V, May. Available online at https://pmworldlibrary.net/wp-content/uploads/2020/04/pmwj93-May2020-Okereke-circles-of-corruption-in-global-construction-industry.pdf
About the Author
O. Chima Okereke, PhD, PMP
Herefordshire, UK
Dr. O. Chima Okereke, Ph.D., MBA, PMP is the Managing Director and CEO of Total Technology Consultants, Ltd., a project management consulting company working in West Africa and the UK. He is a visiting professor, an industrial educator, a multidisciplinary project management professional, with over 25 years’ experience in oil and gas, steel and power generation industries. For example, On December 26th 2013, he completed an assignment as a visiting professor in project management; teaching a class of students on Master’s degree in project management in the Far Eastern Federal University, Vladivostok, Russia. In August and September 2013, he conducted an innovative, and personally developed training programme for seventy six well engineers of Shell Nigeria to enhance the efficiency of their operations using project and operations management processes.
Before embarking on a career in consulting, he worked for thirteen years in industry rising to the position of a chief engineer with specialisation in industrial controls and instrumentation, electronics, electrical engineering and automation. During those 13 years, he worked on every aspect of projects of new industrial plants including design, construction and installation, commissioning, and engineering operation and maintenance in process industries. Chima sponsored and founded the potential chapter of the Project Management Institute (PMI®) in Port Harcourt, Nigeria, acting as president from 2004 to 2010.
Dr. Okereke has a Bachelor of Science Degree in Electrical Engineering from the University of Lagos, and a PhD and Masters in Business Administration (MBA) degree from the University of Bradford in the UK. He also has a PMP® certification from the Project Management Institute (PMI®) which he passed at first attempt. He has been a registered engineer with COREN in Nigeria since 1983. For many years, Total Technology has been a partner for Oracle Primavera Global Business Unit, a representative in Nigeria of Oracle University for training in Primavera project management courses, and a Gold Level member of Oracle Partner Network (OPN. He is a registered consultant with several UN agencies. More information can be found at http://www.totaltechnologyconsultants.org/.
Chima is the publisher of Project Management Business Digest, a blog aimed at helping organizations use project management for business success. Dr. Okereke is also an international editorial advisor for the PM World Journal. He can be contacted at chima.okereke@totaltechnologyconsultants.com or info@totaltechnologyconsultants.org.
To view other works by Dr. O. Chima Okereke, visit his author showcase in the PM World Library at https://pmworldlibrary.net/authors/dr-o-chima-okereke/
