Corruption in the construction industry is an ever-present risk for contractors, consultants, financiers, and governments are susceptible to corruption as it is easy to justify their high cost on the basis that they will have an even higher return.
In such cases, persons involved in both the purchase and supply side are less keen on the costs and more likely to allow, or incorporate, unnecessary or exaggerated costs with or without kickbacks. Project sponsors are also more likely to ignore matters such as negative environmental impact assessments.
On the other end of the ROI spectrum are projects which have no real or measurable economic value and are implemented because they are pet projects or ‘political flagship’ projects. In such cases, the people involved expect that the projects will go on regardless of their viability as they have a powerful sponsor.
Projects that are plagued by corruption at inception are more likely to suffer from further cost escalations during the construction phase. This is because the persons involved with the projects are either already compromised or not motivated to keep costs in check. They are also more likely to be poorly designed.
Corruption at the conceptualisation and planning phase takes many forms. Some will only involve the buy side, like designing and approving white elephant projects, or overstating budgets to factor in future kickbacks, or exorbitant valuations of land. Others will involve both the buyer and the preferred suppliers, such as providing information or requirements selectively and including features that can only be met by the favoured supplier are introduced to justify single sourcing.
Some schemes will only involve the supply side for instance where contractors present unsolicited proposals that are hard to understand or compromise the results of feasibility studies in cases where contractors undertake the studies.
