Tue, May 09, 2006 - Page 8 News List

Fighting corruption in construction

By Chern Jenn-chuan 陳振川

The Global Corruption Report 2005, published by the international non-governmental organization Transparency International (TI), sums up the situation on corruption and anti-corruption efforts in 40 countries and demonstrates the gravity of the issue of corruption in public construction projects worldwide. TI chairman Peter Elgen pointed out that corruption in large-scale public projects is a daunting obstacle to sustainable development.

"When the size of a bribe takes precedence over value for money, the results are shoddy construction and poor infrastructure management. Corruption wastes money, bankrupts countries and costs lives," Elgen said.

The global construction sector, worth approximately US$3.2 trillion, is huge, and the corruption found within it has significantly worsened global corruption overall. TI estimates that bribery and corruption in project procurements alone raise the final cost of construction by at least 10 percent, incurring annual losses of about US$320 billion worldwide. TI ranked corruption in the construction sector above that in any other sector (including arms and oil procurement), demonstrating just how serious the situation is.

Taiwan is not among the countries surveyed by TI, but it is clear that the problem also exists here. Look at the public's familiarity with corruption in public infrastructure projects, the involvement of elected representatives in construction waste soil management and other public constructions and the indictments of several local government officials over their involvement in the 921 earthquake reconstruction project. Add in the recent wave of controversy from large-scale construction projects. In tens of thousands of local construction firms, we see even graver problems: Loosely organized management structures, variable quality standards, dodgy practices, intervention by public representatives and a lack of regulation in the professional code of ethics.

Taiwan is virtually alone in the amount of trust placed in the words of academics on issues regarding construction procurement. Unfortunately, these academics have themselves slowly become tainted by corruption. In order to survive, some businesses are now turning to public relations, trying to build relations with academics involved in evaluating construction companies. Political intervention and the inability of chief executive officers to remain impartial are strangling fair competition in the market.

In recent years, the system for evaluating the most advantageous tender has frequently been abused, especially by local governments. The Public Construction Commission's frequent amendments to regulations governing procurements have only complicated the matter, while doing little to prevent the use of unacceptable procurement practices. Nor is the answer a return to the system of awarding the tender to the lowest bidder, as this will only result in vicious price competition and substandard work.

Similarly, we also see that the execution of project evaluation reports lacks fairness, objectivity and professionalism. There is clearly political involvement in the construction sector, especially in the operation of large-scale construction consultancies, which assist the heads of construction companies with design, construction management, procurement in bid preparation and professional management, as well as involvement in turnkey and build-operate-transfer projects.

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