Managing the Contractor-Customer Relationship

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Running head: MANAGING THE CONTRACTOR-CUSTOMER RELATIONSHIP

Managing the Contractor-Customer Relationship

Miguel A Ortiz

BUS437

March 16, 2020

James Young

MANAGING THE CONTRACTOR-CUSTOMER RELATIONSHIP

Managing the Contractor-Customer Relationship

According to Setiawan et al., high levels of competition in the contracting industry have

and are raising lots of concern concerning contractor-client relationship (2015). With such a

significant challenge, contracting companies are implementing winning competition mentality

goals in their enterprises. In other words, contracting companies are becoming more aggressive

as a response to ensuring that they provide competitive approaches, plans, and actions to gain a

competitive advantage over the business rivals (Setiawan et al., 2015). Nonetheless, Baiden et

al., the contracting industry, experienced short-term standards of collaboration and working

agreements, for example, projects (2018). Most of the project management in the contracting

business has been established through the rules of effective collaboration, communication, and

performance-driven selection of both parties. These approaches have also been considered as

approaches to solving issues that might arise from the project or the agreement among or

between the parties involved (Setiawan et al., 2015).

Additionally, the norms of contracting are prone to various barriers, especially during the

establishment of ideal contractor-client leadership. Majorly, the interaction between the

contractors driving towards the success of the project can either lead to a positive or negative

outcome (Karna, 2004). For instance, continuous and up-to-date communication among the

involved parties highlights a successful project since the contractor will have the opportunity to

address the progress and issues that might arise, among others, to the client; therefore,

establishing trust and honesty between the two – unfortunately, short term communication might

affect the project due to barriers, miscommunication, and disputes (Baiden et al., 2018). In other

terms, the paper analyzes managing contractor-client relationships under the scope of contracting

MANAGING THE CONTRACTOR-CUSTOMER RELATIONSHIP

ethical issues, benefits of contracting, the importance of communication, and the risk and

responsibilities of the contractor-consumer link.

Ethical Issues in Contracting

Cummins Tim in his article entitled “Contracts and ethics – a dilemma,” the author

highlights that contracts are ethical entities that emphasize the formalization of commitment and

are enforced by law, which in return relies on the guides that are law dependent; thus, removing

the norms of illegal actions and ensuring the standards of righteousness, fairness or policy

compliance (Cummins, 2013). Majorly, the author adds that contracting is increasingly involving

ethical codes of conduct since the contractors often have concerns over the establishment’s

reputation risk. It is without any doubt that contractors or negotiators play an essential role in

creating and maintaining ethical standards. Still, often their influence on contracts and business

professionalism are questioned, and so are the codes of ethical conduct implemented in the entire

process. This section will analyze fraud and briary, corporate social responsibility, and conflict

of interest as the ethical issues highly experienced in the contracting industry.

Fraud and Bribery

According to May (2013), bribery is an offence categorized under corruption fraud.

Besides, according to research conducted by the Association of Certified Fraud Examiners, it

was established that bribery among the severe categories of corruption in the contracting industry

occupying roughly 30% of corruption acts. Nonetheless, Adnan et al. (2012), perception of fraud

and bribery as sub-categories of corruption, was confirmed by May’s article. An exciting

element covered by Adnan et al. was on the fact that crime is a form of upward extraction and, at

times, downward redistribution (2012). Some of the significant approaches of corruption

MANAGING THE CONTRACTOR-CUSTOMER RELATIONSHIP

highlighted in the study included bid-rigging, the conspiracy by bidders, fraudulent approach to

contact access, contract performance fraud, and auditory fraud.

Majorly, it is not an easy task to define and identify the composition of a fraudulent act,

but there are means of analyzing the unethical standards of bribes. Bribes compromise the

establishment of an acceptable relationship construction, facilitated payments, and extortions

compromise the fair chances of allocating contracts and bribery exposes the norms of cultural

and racial bias (Adnan et al., 2012). In other terms, fraud and corruption are unacceptable

practices; thus, making them unethical. Nonetheless, corruption in the forms of kickbacks,

baksheesh, and pay-offs, among others, are all approaches of economic crime that involve acts of

deceit as means of landing contracts and compromising the legal and ethical standards set for

awarding contracts (Adnan et al., 2012).