CHAPTER 20

Project Management Ethics

Responsibility, Values, and Ethics in Project Environments

THOMAS MENGEL, PHD, PMP, UNIVERSITY OF NEW BRUNSWICK

Good or bad? Right or wrong? In trying to meet requirements, project management includes decision making based on choices and criteria. Ethics are considered as one basis for the decisions to be made.

TERMS AND CONCEPTS OF ETHICS AND ETHICAL DECISION MAKING: VALUES, MORALS, AND ETHICS

Values are the major motif of our actions and endeavors (e.g., preserving our environment, making a profit). They provide us with orientation and serve as a basis for responsible decisions.¹

To make daily choices about good or bad behavior easier, societies and groups tend to develop principles and rules that guide our conduct. These morals are codified convictions and expectations as to what is considered good behavior (e.g., shop locally).

Ethics are the systematic combination of values and morals to enable rational and values-based judgments and decisions about what ought to be done. Ethics include criteria and processes enabling us to arrive at or to assess personal decisions or behavior in terms of good or bad and right or wrong (e.g., religious ethics, corporate codes of conduct).

SYSTEMS OF ETHICAL DECISION MAKING

Ethical decision making tends to be easy in the case of one option serving one value. Facing several options serving one value or conflicting choices (e.g., the above-cited dam project), we need to enter a decision-making process based on ethical considerations helping us to sort out the ethical dilemma and arrive at an ethically sound decision.²

Results-based systems focus on the “good” end. They are interested in good results, ignoring how they came about. In a rather simplistic economic environment, for example, a cost-benefit analysis will lead to a decision in favor of the greatest gain. In more complex situations, however, it becomes difficult to weigh the level of gain of a majority against the level of pain for a minority. A more elaborate approach by Rawls³ is built on the concepts of fairness and cooperation. Trying to eliminate personal preferences by pretending that the actors were under a “veil of ignorance” hiding their personal situation and status, Rawls argues that not knowing who exactly will benefit from any given decision will most likely produce just decisions.

Rules-based systems focus on “right” conduct. Behavior is considered “right” if based on “right” principles, independent of its results. Good will and universal applicability of the principles of actions provide the major criteria for evaluating decisions. However, this approach does not easily help us to decide in the case of conflicting principles.

ETHICAL CONSIDERATIONS IN PROJECT MANAGEMENT

Ethics deals with right actions and good results. Project management strives for meeting project requirements through project activities. Hence, every aspect of project management involves ethical considerations and may produce an ethical dilemma. However, “ethical hot spots”⁴ in project management are areas of interest to the public and issues that touch on basic, generally accepted values (human rights, preservation of our environment, financial honesty, etc.).

Benefits of Managing Ethics in Project Environments

Enron, Arthur Andersen, WorldCom, and other companies have brought ethical questions to the forefront of business and project environments. Thus, managing ethics is expected to lessen the liability and maintain the professional integrity of executives and project managers. Furthermore, managing ethics has been proven to provide companies with financial advantages and an improved public image.⁵ However, beyond tactical considerations, ethical reasoning per se and values-oriented leadership⁶ become part of a comprehensive organizational and project strategy in trying to “maintain a moral course in turbulent times . . . [and to] support employee growth and meaning.”⁷

Existing Approaches to Managing Ethics in Project Management

While many project teams implement codes of conduct for their projects, ethical reasoning begins to emerge in some particular project management areas. The Centre for Computing and Social Responsibility at De Montfort University in the United Kingdom is striving to make implicit ethical considerations explicit for software project management.⁸ Some dominant ethical principles (honor, honesty, bias, adequacy, due care, fairness, social cost, and action) are used within the project management process to produce a software development impact statement. First, stakeholders and ethical issues are identified (generic). Then, this process is applied to the work breakdown structure (specific), ensuring the consideration of ethical aspects in all project activities. Approaches like these may be the cornerstone of managing ethics comprehensively in project environments.

Ethical Standards in Business

International Standards of Business Ethics

In trying to increase awareness and appreciation of cultural differences, various standards of global business ethics have been published.⁹ Kofi Annan, the former secretary-general of the United Nations, started the latest and most comprehensive initiative in January 1999. In challenging business and other leaders to support and implement core values within their corporate and public practices and policies, Annan initiated the United Nations Global Compact¹⁰ and put forward nine principles regarding human rights, labor, and the environment. At its first leaders’ summit on June 24, 2004, in New York, the principles were enhanced by a tenth principle against corruption, and the awareness of the need for global cooperation is growing continually. “This ever-increasing understanding is reflected in the growth of the Global Compact’s rapid growth. With over 10,000 corporate participants and other stakeholders from over 130 countries, it is the largest voluntary corporate responsibility initiative in the world.”¹¹

Project Management Institute Standards of Ethics

The Project Management Institute (PMI), “one of the world’s largest not-for-profit membership associations for project management,”¹² takes professional responsibility and ethical conduct of its members and certified project management professionals (PMPs) seriously. Thus, the institute has presented respective statements and codes at two levels.

While the 2000 edition of the Project Management Institute’s Guide to the Project Management Body of Knowledge (PMBOK^® Guide) only briefly touched on ethical norms that may “affect the way that people and organizations interact” and on “social-economic, environmental sustainability,”¹³ the editions of 2004, 2008, and 2013 put greater emphasis on the professional responsibility the project management team has to its stakeholders and refers to the respective Code of Ethic and Professional Conduct¹⁴ that PMI members, volunteers, and PMI-certified professionals need to adhere to. Furthermore, the later editions suggest considering the social, economic, political, and physical impact of projects beyond the existence of the project organization. Finally, they point out the need for project teams to consider and understand their environment, including ethical issues.

In particular, the PMI Code of Ethics and Professional Conduct “describes the expectations that we have of ourselves and our fellow practitioners in the global project management community. It articulates the ideals to which we aspire as well as the behaviors that are mandatory in our professional and volunteer roles. . . . We also believe that this Code will assist us in making wise decisions, particularly when faced with difficult situations where we may be asked to compromise our integrity or our values.”¹⁵ The Code affirms and in more detail describes the values of responsibility, respect, fairness, and honesty. Furthermore, for each value, it lays out aspirational and mandatory standards.

Finally, the Code describes the history of these standards and the open and collaborative process for their development; it concludes with a glossary of key terms including conflict of interest and duty of loyalty. The mandatory standards require professionals to adhere to all relevant regulations and legal requirements; to report unethical and illegal conduct; to negotiate and act in respect of others; to disclose and withdraw from conflict-of-interest situations; to refrain from favoritism, bribery, and discrimination; and to not engage in deceptive or other dishonest behavior. In its aspirational standards, the Code lays out the expectations for professional conduct such as serving the best of public interests, accountability, confidentiality, respectful and fair behavior, truthful communication, and good faith.

The fifth and latest edition (2013) of the PMBOK^® Guide maintains and even strengthens that approach by adding stakeholder management as additional knowledge area and thus giving the management of relations with various stakeholders—implicitly including the perspective of ethics and social responsibility—more weight.¹⁶

MANAGING ETHICS IN PROJECT ENVIRONMENTS

Ethical Considerations for the Project Life Cycle and Organization

Phases in projects are supposed to reduce complexity, increase transparency, and allow for controlled transitions and reviewed handoffs.¹⁷ Reviews are meant to detect problems and suggest solutions. Reviews may even be used to stop projects that no longer seem to be feasible within the given constraints. Project managers and team members are responsible for honestly and truthfully reporting any problems regarding phase deliverables and preparing a thorough review of the phase they are about to close. Although rushing could be tempting and may even be supported by time constraints put forward by stakeholders, giving in without clearly discussing the impact and associated risk is irresponsible and unprofessional conduct.

Communication with and management of project stakeholders is at the heart of successful project management. Furthermore, identifying stakeholders, determining their requirements, and managing their influence involve ethical considerations, including varying levels of responsibility. Project managers need to comprehensively determine the impact of any decision to be made. Expectations of funding or otherwise powerful authorities need to be balanced with conflicting requirements of other stakeholders. To comprehensively manage stakeholder expectations and conflicting issues, objectives and values need to be carefully addressed and openly discussed. The focus needs to be on customer satisfaction without disregarding others.

Furthermore, project needs have to be balanced with organizational influences; systems, cultures, and structures need to be considered. While team and project cultures may be innovative and leading the change, the possible difference to organizational culture and hierarchy has to be “managed” in loyalty to superiors and to the organization as a whole.¹⁸

Ethical “Hot Spots” in the Project Management Processes and Knowledge Areas

The project manager is responsible for tailoring project management processes according to the needs of the project and the organization. Since trade-offs are inevitable, the ethical implications of all decisions need to be assessed.

While defining the project during the initiating processes, the project team needs to understand the values, concerns, and expectations of stakeholders and analyze the possible impact of the project. That may help the project manager to create buy-in and evaluate the existence of a strong and broad-enough basis for the project to move forward.

The focus of ethical considerations in the planning processes is defining the detailed objectives and preparing the best course of action. Translating the general impact analysis of the project on various stakeholders into the detailed project activities and deliverables documented in the work breakdown structure is a helpful approach to base planning decisions on ethical reasoning. Furthermore, all planning processes need to be conducted and communicated honestly and thoroughly both internally and externally.

Executing, monitoring, and controlling processes implement the plans, with the ethical focus again being on communicating timely and truthfully with all stakeholders and on continuing to manage their expectations in balance with changes in and around the project environment. In spite of daily pressures and necessary control measures, not losing sight of stakeholders as human beings having values, objectives, and feelings, rather than as mere resources or obstacles of project improvement, becomes the major ethical challenge of execution and control. Customer satisfaction and team development are the main criteria for measuring project progress and success. Both depend on correct, comprehensive, and careful information and feedback in a timely manner.

Finally, the closing processes need to formalize acceptance, evaluate stakeholder satisfaction, and bring the project to an orderly end. Including evaluations of the impact analysis and stakeholder management processes in final lessons learned and post-implementation reviews will further improve the processes of ethical decision making and conduct.

Guidelines for Managing Ethics in Project Environments

Some ethical principles for project management have emerged in our earlier discussions. A clear vision—including values—needs to be part of project leadership and should be aligned with policy, practice, and communication to become effective. Project managers need to be “obsessed”¹⁹ with basic values like fairness, honesty, due care, and integrity. They need to feel comfortable communicating intensely with a variety of internal and external stakeholders and taking their perspectives seriously. Ethical decision making requires commitment to solving problems collaboratively based on shared values. However, accountability calls for personal rather than collective responsibility in a professional context. The human, social, and environmental cost and impact of decisions and actions need to be analyzed, considered, and balanced with other project and stakeholder requirements in a local and global perspective. The initial results of that process and later changes need to be documented in a product- or service-oriented project deliverables impact statement (ProDIS) and a process-oriented project management impact statement (ProMIS).

Specific project management guidelines on ethical decision making can help implementing the ethical principles:

• Include ethical dimensions in all decision-making procedures.

• Use checklists and samples for the ProDIS and ProMIS.

• Make ethics decisions in groups and make them public (use of the “veil of ignorance” approach).

• Define a joint process and mutually agreeable criterion for ethical decision making.

• Apply both ethical principles and evaluation of the possible results and impact.

• Continually evaluate and improve the procedures of ethical decision making.

Finally, although corporate project management policies and procedures for man-aging ethics are not prerequisites for managing ethics in individual projects, they substantially help in doing so. However, top-down commitment is paramount. If senior executives do not live up to the core values of the corporation and fail to communicate both their shortcomings and their continual striving for ethical growth, all further efforts in ethical programs will be perceived as dummy activities merely aimed at deceiving the public. Thus, on top of the possible development of codes of ethics or conduct, ethics management needs to be implemented as a comprehensive and corporate-wide process using cross-functional teams.

Furthermore, ethics management needs to be integrated in other management practices to become effective. Ethicists and ethics committees may then be functions supporting the ethics management process by designing and implementing procedures to develop the impact statements (ProDIS and ProMIS) and to resolve ethical dilemmas based on vivid corporate values and principles. Both leaders and managers as well as staff members charged with special ethics functions need to hold and support regular challenging meetings confronting values statements with practical conduct and procedures, and thus updating and improving both. Everyone involved in that process needs to be educated and trained in ethics management and ethical reasoning and decision making.

Finally, leaders and managers need to install a corporate culture that values forgiveness and a continual effort for improvement. The survival of such a culture depends on the valued perception of ethical integrity and moral courage, even in the light of their occasional negative impact on the bottom line. Most probably this culture can best be implemented and nurtured by leaders serving both their various stakeholders and a joint mission based on shared values.²⁰

SAMPLE EXERCISES

1. You are a passionate nonsmoker concerned about public health and a member of an antismoking organization. As a PMP, you are being offered an assignment as the responsible project manager for an external client in the tobacco industry. Your job would be to design and implement a sales initiative aimed at an increased market share of that client. How do you respond?

a. I accept. My boss has told me that increasing the market share of one company in a saturated market will most probably not increase smoking. In addition, if I don’t accept, somebody else will.

b. I accept. My involvement with the antismoking organization is my business and not publicly known.

c. I decline and insist on my company’s rejecting the assignment due to its general unethical background.

d. I decline and report my private involvement to my boss and state my concern that I cannot serve both the external client and my antismoking organization.

Answer: d. Your affiliation creates a conflict of interest that according to the PMI Code of Ethics and Professional Conduct needs to be reported to your superior.

2. As a project manager in a foreign country, you are in charge of contracting various suppliers. During the solicitation process one of the applicants for a contract offers your team free and preferred on-site housing. How do you respond?

a. I politely but firmly reject that offer. Accepting gifts from suppliers is perceived to be unethical by both global and professional standards.

b. I accept. In the culture of that particular country, this is not considered unethical but rather a common and friendly gesture among business partners.

c. I decline. Acceptance would create a dependency that will make objective negotiations regarding costs, time, and quality of the work performed more difficult.

d. I accept. That offer does not provide me with a personal advantage because I will be staying in a first-class hotel when I am on-site. Instead, it improves the situation of my team.

Answer: a. Accepting a gift from a supplier is explicitly mentioned as being unethical by professional standards and standards of global business ethics.

3. You are a project manager bidding for a project management contract. The contracting agency approaches you with the request to reduce the estimated costs by 30 percent based on the same deliverables and constraints. How do you respond?

a. I recalculate the bid by considering cheaper material and labor for items that have not explicitly been mentioned in the bid.

b. After seriously reconsidering, I truthfully present all the details and reaffirm that delivering the expected level of quality in the given time frame has its price.

c. Cost projections at this stage are rough estimates only. So, reducing the bid by 30 percent now to get the contract and recovering the missing amount “elsewhere” during the run of the project is a rather “normal” way of managing projects on a contract basis.

d. I know that competitors have underestimated the actual costs to get the contract. Thus I need to do the same in order not to disadvantage my company.

Answer: b. Professional codes of conduct require project managers to truthfully present all information to the best of their knowledge.

CONCLUSION

A comprehensive model of project management ethics and of managing ethics in a project environment needs an integrative approach, including an ethical analysis of the process as well as of the impact of project decisions. Existing approaches of business ethics and of project management–related codes of conduct and ethical guidelines serve as a first basis for ethical decision making in project environments based on professional responsibility and conduct. Managing ethics in project environments needs to inspire an appropriate project culture and include the mechanisms that ensure and improve ethical decision making, actions, and results.

Corporate leadership based on the model of servant- and values-oriented leadership will certainly support managing ethics in project environments. However, professionals in project management are challenged to implement project management ethics even in an unfavorable corporate or organizational environment. They may succeed if they passionately lead and manage projects by comprehensively serving both the project mission and requirements as well as the expectations of their stakeholders, and by orienting toward mutually acceptable values throughout the various project phases and processes.

REFERENCES

¹ Victor E. Frankl, Man’s Search for Meaning (New York: Simon & Schuster, 1985); Thomas Mengel, “High Potential” Can Be Deceiving—Utilizing the Reiss Motivational Profile^® in HR and Leadership Development. FMI*IGF Journal 23, No. 3 (2012), pp. 10–12; Thomas Mengel, “Motivation,” in J. Gosling and A. Marturano (editors) Key Concepts in Leadership Studies (Milton Park, Oxfordshire, UK: Routledge, 2008), pp. 111–114.

² J.W. Weiss, Business Ethics: A Stakeholder and Issues Management Approach with Cases, 5th edition (Mason, OH: South-Western Cengage Learning, 2009); Laura P. Hartman (editor), Perspectives in Business Ethics (New York: McGraw-Hill, 2002), pp. 6–10; Peter Singer (editor), A Companion to Ethics (Malden: Blackwell Publishers, 1999), pp. 205–218, 230–248.

³ John Rawls, A Theory of Justice (Cambridge, MA: Harvard University Press, 1971).

⁴ Simon Rogerson and Donald Gotterbarn “The Ethics of Software Project Management,” in G. Collste (editor), Ethics and Information Technology. (Delhi: New Academic Publishers, 1998), pp. 137–154.

⁵ Lynn S. Paine, Value Shift: Why Companies Must Merge Social and Financial Imperatives to Achieve Superior Performance. (New York: McGraw-Hill, 2003); Rebecca Barnett, “How business ethics failed corporate America (and what we must do next),” Project Magazine 3, No. 7 (2002), http://www.projectmagazine.com/v3i7/ethicsv3i7.html.

⁶ Thomas Mengel, K. Cowan-Sahadath, and F. Follert, “The value of project management to organizations in Canada and Germany, or do values add value? Five case studies, Journal of Project Management 40, No. 1 (2009), pp. 28–41; T. Mengel and K. Cowan-Sahadath, “The value of project management to Canadian government organizations, or do values add value?” PMI Research Conference 2008 proceedings (Warsaw, Poland: PMI, 2008); T. Mengel, “Leadership development for complex environments—helping create a meaningful future,” FMI Journal—Financial Management Institute of Canada 19, No. 1 (2007), pp. 13–15.

⁷ Carter McNamara, Complete Guide to Ethics Management: An Ethics Toolkit for Managers, 1999, http://www.managementhelp.org/ethics/ethxgde.htm.

⁸ Rogerson and Gotterbarn, pp. 137–154.

⁹ Hartman, pp. 730–746.

¹⁰ The Global Compact, http://www.unglobalcompact.org.

¹¹ http://www.unglobalcompact.org/AboutTheGC/index.html.

¹² http://www.pmi.org/About-Us.aspx.

¹³ Project Management Institute, A Guide to the Project Management Body of Knowledge (Newtown Square, PA: PMI, 2000), p. 27.

¹⁴ Project Management Institute, Code of Ethics and Professional Conduct (Newtown Square, PA: PMI, 2007), http://www.pmi.org/~/media/PDF/Ethics/ap_pmicodeofethics.ashx. See also http://www.pmi.org/About-Us/Ethics/Code-of-Ethics.aspx and http://www.pmi.org/about-us/ethics.aspx.

¹⁵ Ibid.

¹⁶ Project Management Institute, A Guide to the Project Management Body of Knowledge, 5th edition (Newtown Square, PA: PMI, 2013).

¹⁷ PMI 2008, pp. 18–21.

¹⁸ Ibid., pp. 27–33.

¹⁹ Carter McNamara, Complete Guide to Ethics Management: An Ethics Toolkit for Managers, 1999, http://www.managementhelp.org/ethics/ethxgde.htm.

²⁰ Robert K. Greenleaf, Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness (Mahwah, NJ: Paulist Press, 1977).