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Chapter 38

Projects Responsibility
and Ethical Practices

38.1 Ethical Code of Conduct


This final chapter describes basic concepts regarding a project management code of professional
ethics and social responsibility as outlined by Project Management Institute (PMI). The code
specifies that a professional project manager (PM) should exhibit the following characteristics and
skills (PMI):

1. Ensure individual integrity and professionalism by adhering to legal requirements and ethi-
cal standards in order to protect the community and all stakeholders
2. Contribute to the project management knowledge base by sharing lessons learned, best prac-
tices, research, and other information within appropriate communities in order to improve
the quality of project management services, build the capabilities of colleagues, and advance
the profession
3. Enhance individual competence by increasing and applying professional knowledge to
improve services
4. Balance stakeholders’ interests by recommending approaches that strive for fair resolution in
order to satisfy competing needs and objectives
5. Interact with team and stakeholders in a professional and cooperative manner by respecting
personal, ethnic, and cultural differences in order to ensure a collaborative project manage-
ment environment.

A more detailed preamble to the PMI code can be extracted from the Code of Ethics for Project
Managers (Leland). This source also includes the process for ethical inquiry and appeals. O’Brochta
offers the following research evidence:
A recent study conducted by Vrije University Amsterdam found that the more a leader acts
in a way that followers feel is appropriate and ethical, the more that leader will be trusted
(O’Brochta).

569
570  ◾  Project Management Theory and Practice

To add to this quote, the attribute of trust is a primary reason that subordinates will follow, so
lack of that attribute will certainly affect project performance.

38.2 Introduction
The professional PM must understand this aspect of his role. It is no longer sufficient to just focus
on getting the job done. Daily news articles reinforce the negatives that can occur when a manager
or organization decides to short cut either ethical or legal limits for which they are responsible.
Improper actions by middle and upper management can destroy promising careers and even the
organizations these individuals work for. In all such cases, a poor decision choice lays at the root of
the failure. We categorize these under the category of professional responsibility and ethics. This
occurs whether the individual is president of the United States, CEO of a large organization, or PM.
The positive value of ethical behavior has been increasingly recognized in recent years. Surprisingly,
the act of being ethical and honest is not as easy as one might think as this chapter will attempt to
illustrate. From a PMI perspective, the PM must understand the basic tenets of the topic and from
an operational view one must be able to translate these into workable daily job traits.
In support of this recognition, PMI has developed a formal Code of Ethics and Personal
Conduct. The basic structure of this code deals with the following attributers (PMI CODE2):

◾◾ Responsibility to uphold standards of behavior


◾◾ Respect
◾◾ Fairness
◾◾ Honesty

Although each of these terms is reasonably familiar to most, implementation of the underlying
concepts in the work environment is not necessarily easy. Figure 38.1 provides a good overview of
the basic actions related to each of the key structure components.

PMI code of
ethics
Content and professional
covered conduct

Values Responsibility Prospect Fairness Honesty

Understanding
Ownership of Investment of Objective and
Definition of the truth and
decisions and people and impartial
values truth-based
actions resources decisions
action

Honoring Good faith Handling conflicts of


Required commitments Nonabusive interests No deceit
contact Upload legal and Respect for Proper motives in No dishonesty
ethical rules resources decisions

Figure 38.1  PMI code of ethics and professional responsibility.


Source: Adapted from the 2006 version of PMI’s Code of Ethics and Professional Conduct,
www.pmi.org/About-Us/Ethics/Code-of-Ethics.aspx.
Projects Responsibility and Ethical Practices  ◾  571

It is essential that PMs not only be good employees for the organization that they work for,
but they also must behave as a broader representative of the project stakeholder population that
may consist of external parties outside of their organization. Given this broad scope of stakeholder
involvement, normal behavioral rule interpretation can become complex in the real world. The
external influences come from the various needs and interest groups with various diverse stakes
to project. The key theme of this code is that the PM must follow a prescribed set of professional
responsibility and ethical principles. These principles include the following areas:

◾◾ Ensuring individual integrity


◾◾ Contributing to the base of project management knowledge
◾◾ Enhancing individual performance
◾◾ Balancing stakeholders’ interests
◾◾ Interaction with the project team and stakeholders in a professional and cooperative manner

Ensuring one’s individual integrity requires taking ethically based responses into a number of
common project scenarios. Generally speaking, the PM must do what is right, but that term is
difficult to define in every case. Specifically, written and oral communications with project stake-
holders and governmental authorities must be truthful. The PM must also adhere to the approved
processes for project management activities. Lastly, any known violations of applicable laws and
ethical standards must be immediately reported to the appropriate authorities.
To contribute to the project management knowledge base, a PM must do a number of things.
First, any lessons learned from their personal project experiences must be shared with others who
would profit from that knowledge. Following this principle also requires that the PM contributes
to the education of and mentoring to less experienced PMs. In addition, he needs to engage in
research to determine how to improve the profession and its processes, and then the findings of
this research. Finally, he should strive to find techniques for improved measurement of project
performance and work to continuously improve those outcomes.
In order to improve individual competence, the PM must take a number of steps. Initially, it is
important to appraise and understand his own personal strengths and weaknesses. Next, the PM
needs to take advantage of learning opportunities to address these weaknesses. Furthermore, he
should prepare and execute a personal development plan in much the same manner as he pursues
a project objective. Finally, the individual must continue to stay updated on knowledge related to
relevant professional topics. This entails seeking out new information about project management
and the industry.
Balancing project stakeholders’ interests requires that a PM consider the interests of all internal
and external stakeholders. Initially, the PM needs to examine the interests and needs of these indi-
viduals and groups, then seek to understand ways in which these diverse interests can be best met.
Following this, he must also work to resolve conflict with the understanding that the customer’s
needs be given careful and primary consideration.
Interacting with the project team and stakeholders in a professional and cooperative manner
requires a number of actions. Cultural differences can impact the smooth functioning of a project
team. The PM needs to understand these potential conflict areas and take them into account in his
dealings. In addition, he must deal with differences in communication preferences, work ethics, and
work practices among these groups. All future stakeholder dealings should recognize and respect
these differences. Cultural and language differences across country boundaries are particularly prone
to critical concerns. When projects contain multinational stakeholders, the PM needs to follow local
practices and customs so long as doing so does not violate laws or his ethical boundaries.
572  ◾  Project Management Theory and Practice

Significant differences in interests can also occur within a single country environment. These
include customers, government agencies, other business functions involved in the project, spon-
sors providing financial resources for the project, the internal project team, parties from inside
or outside the organization, end users of the project’s product, members of society who will be
affected by the project, and others. Clearly, this diversity of interest requires that PMs to give
adequate attention to numerous potential problem areas during the course of a project. These deal-
ings almost assuredly will have some ethical concern in regard to information handling or project
decision-making. It is only by being sensitive to this topic that the PM can ensure that his ethical
responsibilities to these stakeholders will be effectively and properly discharged. The list below
summarizes five basic rules of thumb to guide PMs in their behavior regarding honesty and eth-
ics. Following these rules do not guarantee appropriate behavior, but the following list should help
guide managers in conducting themselves in an ethical and professionally responsible manner:

1. Not misuse access to, or control over financial resources that stakeholders have given them
for legitimate use in the project, for example, engage in illegal manipulation of organiza-
tional resources
2. Not mislead stakeholders in regard to the status of the project by providing them with inac-
curate information or failing to provide them with timely information relevant to the project
3. Inform the proper authorities regarding legal or professional violations by other stakeholders
taking place in the context of the project
4. Not reveal trade secrets provided to in confidence, unless holding such information in
­confidence would violate a law, contractual provisions, or professional responsibility/ethical
rules
5. Not use information obtained in the context of the project for the purpose of gaining
an unfair advantage over the stakeholder, or that would be harmful to the stakeholder if
revealed.

Each of the items outlined above seem straightforward and easy to follow; however, situations will
occur in the project environment that will challenge individual interpretation of a specific action.
PMs are frequently faced with opportunities to obtain additional rewards for themselves or
their organizations if they are willing to take a professionally or ethically marginal or inappropri-
ate action, such as conducting one less audit or inspection than they know they should, or looking
the other way when faced with clear evidence of others’ wrong doing, and so on. Unfortunately,
such actions can have far-reaching negative impacts, as well as having the potential to ruin the
manager’s career if the acts are discovered. Even the simple acts of accepting a meal or a football
ticket are judged unethical in some organizations. This means the definition of ethics is not a
national or international standard. For all of these reasons it is important to know what each orga-
nization defines as its ethics and behave according to those rules. Avoiding such situations can be
a veritable minefield if a PM does not clearly understand which actions constitute inappropriate
professional or ethically irresponsible behavior.

38.3 PMI’s Code of Professional Conduct


Given recent experiences in American industry regarding misplaced ethics among senior execu-
tives, PMI has supported the formal publication of a professional ethics code for the PM. Basically,
the PMI code deals with the following (PMI, 1988):
Projects Responsibility and Ethical Practices  ◾  573

1. Organizational rule and policy compliance


2. Personal ethics in terms of reporting qualifications and representations
3. Respect and honesty toward the profession
4. Honesty in reporting facts to stakeholders
5. Maintaining proper confidentiality of data and other information
6. Care in avoiding conflict of interest
7. Care in avoiding receipt of payment from outside sources for questionable reasons.

The PM must think of themselves as honest brokers of process and information. The PMI code
document referenced here is a good overview for appropriate project behavior. It is important to
remember that shortcuts in this area can have significant negative impact on one’s career.

38.4 Sample Ethical Scenarios


Although the idea of honesty and ethics would seem like a simple issue, the real world often pres-
ents some tough interpretations for the PM. Twenty sample questions are shown in this section to
provide an opportunity to review the theoretical material in simulated real-world settings and give
you practice in thinking about the appropriate way to react. Also, discussing these questions with
your peers and changing the scenarios slightly will offer good discussion material.

1. You are working for a U.S. organization and have just finished a very large and successful
project in a foreign country. It is common in this culture to reward people for good work.
The sponsor is extremely happy with the outcome of the project and wants to hold a formal
ceremony and give expensive presents to you and key team members to show his apprecia-
tion. He has told others that it will hurt his feelings if you do not take these gifts. What do
you do?
2. You are a member of a Project Management Professional (PMP) certification study group.
One of the members says that he has a friend who is wired into the exam question authors
and can get significant input on key topics being addressed this round. What do you do? Do
you report this situation to the certifying organization?
3. Success of your foreign project depends on receiving materials in a timely manner; however,
the goods are being held up in local customs for long periods of time. A nephew of the local
Grand Po Bar says that he can provide an expediting service for you and get the goods moved
through customs quickly. In checking around, you find that this seems to be in fact true and
also seems to be the only way that the goods get moved. What do you do? Who would you
coordinate this decision with?
4. You are told by your boss to cut your project budget estimate by 20% in order to get your
project plan approved by senior management. All other cost “cutting” strategies have been
exhausted and you now feel that the current estimate is accurate for the work defined. What
do you do? What if your boss says, “just cut the budget and get the project done with the cut
specified?”
5. Your boss asks you to write an invited article for a national industry publication for him. You
do this and the boss does not include your name on the article. What do you do?
6. While working on an external (contracted) project that has extra budget funds your cus-
tomer asks you to perform some additional tasks that are not included in the formal con-
tract. You should
574  ◾  Project Management Theory and Practice

A. Honor the customer’s request as a sign of cooperation to ensure future business


B. Refuse the request and report the customer to your sponsor
C. Acknowledge the request and advise the customer to submit a formal change request
D. Convene a meeting of the project team and rewrite the scope statement.
7. You are managing an internal project. The initial product test results are very poor and do
not meet the minimum customer requirements. If these results are made available to your
customer you are afraid that they might cancel the project and this could reflect poorly upon
you. Rerunning the product test can be done quickly and inexpensively. Based on this set of
circumstances you should
A. Be the first to recommend canceling the project
B. Inform your external sponsor about the results and wait for a response
C. Inform your management immediately and recommend retesting for verification
D. Withhold the information from management until you perform additional tests to ­verify
the initial results.
8. Your project is running out of budget allocation and significant work remains. You are
directed by senior management to instruct your team to charge their work time to another
project’s account. Given these instructions you should
A. Follow instructions
B. Inform the corporate auditors
C. Understand the background of management’s instructions before taking any action
D. Shutdown the project, if possible.
9. You are working in a country where it is customary to exchange gifts between contractor and
customer. Your company code of conduct clearly states that you cannot accept any gifts from
a client. Failure to accept the gift from this client may result in termination of the contract.
The action to take in this case would be
A. Provide the customer with a copy of your company code of conduct and refuse the
gifts
B. Exchange gifts with the customer and keep the exchange confidential
C. Contact your project sponsor and/or your legal or public relations group for assistance
D. Ask the project sponsor or project executive to handle the gift exchange question with
the client.
10. You are a PM working on a time and material contract. The target price for the project is
$2,000,000 and the project schedule is 12 months. The most recent completion estimate
indicates that the project will finish two months early and if this happens your company will
lose about $250,000 in billings. What should you do?
A. Bill for the entire planned amount since this was the approved budget
B. Bill for the target amount by adding nice to have features to the design at the end of the
project so that the schedule and budget are met
C. Report the project status and completion date to the customer
D. Report the project status and completion date to the customer and ask if they would like
to add any additional features to account for the monies not spent.
11. In order to balance the needs of the many stakeholders involved in your project, the most
desirable method to achieve resolution of conflicts would be
A. Compromise
B. Forcing
C. Controlling
D. Confrontation
Projects Responsibility and Ethical Practices  ◾  575

12. You receive a contract to perform testing for an external client. After contract award, the
customer provides you with the test plan to use for the acceptance process. The vice presi-
dent for Quality Assurance (QA) says that the customer’s test plan is flawed and he will
correct the plan that will be used and it will be more in line with the organizational quality
program. The contract says that the customer will supply the acceptance test plan. In this
case you should
A. Use the customer’s test plan
B. Use the QA manager’s revised test plan without telling the customer
C. Use the QA manager’s revised test plan and inform the customer
D. Tell your sponsor that you want to set up a meeting with the customer to resolve the
issue
13. You have just been assigned as the PM for an ongoing project and discovered that your proj-
ect team is routinely violating OSHA, EPA, and affirmative action regulations. You should
A. Do nothing; it is not your problem.
B. Start by asking management if they are aware that regulations are being violated.
C. Talk to the corporate legal department.
D. Inform the appropriate government agencies about the violations.
14. One of your employees has an opportunity for promotion in another area. If this promotion
is granted, the employee will be reassigned elsewhere causing a resource problem for the
project. You have the authority to delay the promotion until your project is completed. You
should
A. Support the promotion but work with the employee and the employee’s new manage-
ment to develop a good transition plan
B. Ask the employee to refuse the promotion until your project is completed
C. Arrange to delay the promotion until the project is completed
D. Tell the employee that it is his responsibility to find a suitable replacement so that the
project will not suffer
15. In accordance with the compensation agreement for your project you have been given a
$70,000 bonus to be distributed to your seven-person team as you see fit. One of the team
members has not performed particularly well and another of the team is in your car pool.
Based on this situation you should
A. Allocate an equal share to each team member to avoid the image of favoritism
B. Provide everyone a share based on your personal assessment of their performance
C. Give the decision to the team and follow their advice
D. Ask the sponsor to make the decision
16. You are the PM and your customer has requested that you inflate your planned cost esti-
mates by 25%. His logic is that management always reduces the cost of project estimates
by about this amount so this strategy would balance out the required budget. Which of the
following is the best response to this situation?
A. Do as the customer asked to ensure that the project requirements can be met by adding
the increase as a contingency reserve
B. Do as the customer asked to ensure that the project requirements can be met by adding
the increase across each task
C. Do as the customer asked by creating an estimate for the customer’s management and
another for the actual project implementation
D. Complete an accurate estimate of the project. In addition, create a risk assessment show-
ing why the decreased project budget would be inadequate
576  ◾  Project Management Theory and Practice

17. You are the PM working in a foreign country. Your local support person from the client
organization presents you with a list of local team candidates for you to hire and you find
that several of these are related to him. What is your reaction?
A. Reject the team leader’s recommendations and assemble your own project team
B. Review the resume and qualifications of the proposed project team before approving the
team.
C. Determine if the country’s traditions include hiring from the immediate family before
deciding on how to address the family member situation.
D. Replace the project leader with an impartial project leader.
18. You discover that one of your project team members has sold pieces of equipment that were
allocated to the project. Upon further investigation you find that his rationale was a need
for cash to pay for his son’s college tuition. He says that he considers this remuneration for
overtime hours worked without pay and he asks for your support in this view. You also find
that his claim of unclaimed and unpaid overtime is true and that he has been a hard worker
on project. What should you do?
A. Fire the project team member
B. Report the team member to his manager
C. Suggest that the team member report his actions to the HR department
D. Tell the team member that you are disappointed in what he did, and advise him that you
will consider this a fair trade for the unpaid overtime. You also inform him that this will
be grounds for dismissal if it occurs again.
19. You are a PM working within your functional organization and you do not get along well
with the departmental manager. There is a serious disagreement regarding how the project
should be conducted. This disagreement involves schedules, sequence of tasks, quality objec-
tives, and other aspects of the project. While this disagreement is still unresolved the depart-
ment manager tells you to start work on what he considers critical activities. Which of the
following choices is the best for you?
A. Go to higher-level senior management and voice your concerns
B. Complete the activities as requested
C. Ask to be taken off of the project
D. Refuse to begin activities on the project until the conflict issues are resolved.
20. PMI has contacted you regarding a PMP candidate’s experience claim. The individual
involved is a friend and he says that he worked as a PM in your organization. He did work
there, but not in the capacity individuated. This is a violation of which of the following?
A. The PMP code to cooperate on ethics violations investigations
B. The PMP code to report accurate information
C. The PMP code to report any PMP violations
D. Law concerning ethical practices.

References
O’Brochta, M. 2016. Why project ethics matter: Leadership is built on trust. If the foundation is
cracked, a project’s future is in doubt. PM Network, 30, 1, 29. www.pmi.org/learning/library/
why-project-ethics-matter-9838.
PMI, Code of ethics for the project management profession. https://www.pmi.org/-/media/pmi/documents/
public/pdf/ethics/pmi-code-of-ethics.pdf (accessed May 4, 2018)