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Consider the following situation:
Two different general contractors are about to be contracted to
perform work in the same locale for an owner (two separate but similar
projects). The owner identifies that he can achieve cost savings by
asking the two general contractors to communicate together and
identify opportunities to use sub-contractors from one general
contractor's bid on the other's project as well. Both general
contractors will still be contracted to perform the same projects with
the same scope, but now the overall contracts are lower because the
sub contract costs have been optimized.
What are the ethical considerations of this scenario? Are there any
relevant case studies or examples that aid in the development of a
point of view? Ethically, if the owner is a public company, doesn't
it have the obligation to find the lowest cost for its shareholders?
In the example scenario, assume that General Contractor 'A' (GC-A) has
secured top quality (yet lowest cost) electrical and tile subs while
General Contractor 'B' (GC-B) has used different electrical and tile
subs, but found a carpentry sub who is great quality/low cost. The
owner discovers that GC-A never bid to the carpentry sub that GC-B
used and likewise GC-B never bid to the electrical and tile subs used
by GC-A. The owner believes that the costs of the two projects will
be lowered by asking the GCs to "communicate" between each other and
see if the electrical and tile can come down on GC-B's project by
potentially bidding to the elec and tile subs used on GC-A's project.
(and vice versa for the carpentry on GC-A's project).
Additionally, the owner believes that the costs could further be
lowered through the increased volume for the subs that would be shared
across projects (assuming the sub-contractors have enough staff or
that the schedule allows for the subs to finish project A before
starting project B)
For this example, assume that all of the sub-contractors have been
fully qualified and are all above average players. Lets' simply
assume that the reason the GCs did not bid their work to the lower
cost subs was that they simply did not know of them.
This is where some of the ethical questions may arise. Is the GC's
success (in general) due to the the subs that they find and "keep
secret" from their competitors? Or, just the opposite, does the GC
have the obligation to try and find new competitive subs (even if it
means sharing their list with their competitors)? From the owner's
perspective, the sub-list is not secret and the owner himself could
simply disqualify the higher cost subs of GC-A and ask GC-A to bid to
GC-B's subs. I know this is not a black and white ethical dilemma,
but it poses an interesting set of concerns (from the owners'
perspective) and being in the owner's shoes, I am trying to make the
best decsion for all parties involved: shareholders of the owner's
company, the GCs, and the sub contractors.
Two different general contractors are about to be contracted to
perform work in the same locale for an owner (two separate but similar
projects). The owner identifies that he can achieve cost savings by
asking the two general contractors to communicate together and
identify opportunities to use sub-contractors from one general
contractor's bid on the other's project as well. Both general
contractors will still be contracted to perform the same projects with
the same scope, but now the overall contracts are lower because the
sub contract costs have been optimized.
What are the ethical considerations of this scenario? Are there any
relevant case studies or examples that aid in the development of a
point of view? Ethically, if the owner is a public company, doesn't
it have the obligation to find the lowest cost for its shareholders?
In the example scenario, assume that General Contractor 'A' (GC-A) has
secured top quality (yet lowest cost) electrical and tile subs while
General Contractor 'B' (GC-B) has used different electrical and tile
subs, but found a carpentry sub who is great quality/low cost. The
owner discovers that GC-A never bid to the carpentry sub that GC-B
used and likewise GC-B never bid to the electrical and tile subs used
by GC-A. The owner believes that the costs of the two projects will
be lowered by asking the GCs to "communicate" between each other and
see if the electrical and tile can come down on GC-B's project by
potentially bidding to the elec and tile subs used on GC-A's project.
(and vice versa for the carpentry on GC-A's project).
Additionally, the owner believes that the costs could further be
lowered through the increased volume for the subs that would be shared
across projects (assuming the sub-contractors have enough staff or
that the schedule allows for the subs to finish project A before
starting project B)
For this example, assume that all of the sub-contractors have been
fully qualified and are all above average players. Lets' simply
assume that the reason the GCs did not bid their work to the lower
cost subs was that they simply did not know of them.
This is where some of the ethical questions may arise. Is the GC's
success (in general) due to the the subs that they find and "keep
secret" from their competitors? Or, just the opposite, does the GC
have the obligation to try and find new competitive subs (even if it
means sharing their list with their competitors)? From the owner's
perspective, the sub-list is not secret and the owner himself could
simply disqualify the higher cost subs of GC-A and ask GC-A to bid to
GC-B's subs. I know this is not a black and white ethical dilemma,
but it poses an interesting set of concerns (from the owners'
perspective) and being in the owner's shoes, I am trying to make the
best decsion for all parties involved: shareholders of the owner's
company, the GCs, and the sub contractors.