M.Sc.

in Construction Management

NEPAL ENGINEERING COLLEGE

POKHARA UNIVERSITY

M.Sc. in Construction Management

Professional Ethics and Liability in Ethics

ASSIGNMENT

Submitted by:
Nikesh Shrestha
CRN: CM 1 – 1046

Professional Ethics and Liability in Ethics

 M.Sc. in Construction Management

Q.N.4 Explain following terminology

a) Ethics, moral and engineering profession, the code of ethics of NEC and NEA in
comparisons to other International code of ethics
Ethics is the study of the characteristics of morals and involves moral choices made by
the individuals as they interact with other persons. According to Oxford Dictionary,
"Ethics means moral principles that govern a person's behavior or the conducting of an
activity".
According to William Lillie, "Ethics is a normative science of the conduct of human
beings living in societies – science which judges this conduct to be right or wrong, good
and bad."
Therefore, Ethics is
 The science of custom and habit
 The science of character and conduct
 The science of rightness and wrongness
 The science of morality
 The normative science
Engineering ethics will be defined as the rules and standards governing the conduct of
engineers in their roles as professionals.
Moral is concerned with the principles of right and wrong behavior.
Although morality and beliefs are often used as synonyms, morals are beliefs based on
practices or teachings regarding how people conduct themselves in personal
relationships and society, while ethics refer to a set or system of principles, or a
philosophy or theory behind them.
A profession is a vocation founded upon specialized educational training, the purpose of
which is to supply objective counsel and service to others, for a direct and definite
compensation, wholly apart from expectation of other business gain. An engineer is a
professional practitioner of engineering, concerned with applying scientific knowledge,
mathematics, and ingenuity to develop solutions for technical problems.
Code is a set of standards and laws. The code of conduct will help the engineers to have
a set of standards of behavior. They act as guidelines for their behavior.
The general principles of the code of ethics are largely similar across the various
engineering societies and chartering authorities of the world.

Professional Ethics and Liability in Ethics

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Accreditation Board of Engineering and Technology (ABET) Code of Ethics for

Engineers:
1. Engineers shall hold paramount the safety, health, and welfare of the public in the
performance of their professional duties.
2. Engineers shall perform services only in the areas of their competence.
3. Engineers shall issue public statements only in an objective and truthful manner.
4. Engineers shall act in professional matters for each employer or client as faithful
agents or trustees, and shall avoid conflicts of interest.
5. Engineers shall build their professional reputation on the merit of their services and
shall not compete unfairly with others.
6. Engineers shall act in such a manner as to uphold and enhance the honor, integrity,
and dignity of the profession.
7. Engineers shall continue their professional development throughout their careers and
shall provide opportunities for the professional development of those engineers under
their supervision.

IEEE Code of Ethics:

1. To accept responsibility in making engineering decisions consistent with the safety,
health, and welfare of the public, and to disclose promptly factors that might
endanger the public or the environment.
2. To avoid real or perceived conflicts of interest whenever possible and to disclose
them to the affected parties when they do exist.
3. To be honest and realistic in stating claims or estimates based on available data.
4. To reject bribery in all its forms.
5. To improve the understanding of technology, its appropriate application, and
potential consequences.
6. To maintain and improve their technical competence and to undertake technological
tasks for others only if qualified by training or experience, or after full disclosure of
pertinent limitations.
7. To seek, accept and offer honest criticism of technical work, to acknowledge and
correct errors, and to credit properly the contributions of others.
8. To treat fairly all persons regardless of such factors such as religion, gender,
disability, age, or national origin.
9. To avoid injuring others, their property, reputation, or employment by false or
malicious action.
10. To assist colleagues and co-workers in their professional development and to support
them in following this code of ethics.

Similarly, Nepal Engineering Council (NEC) code of ethics:

Professional Ethics and Liability in Ethics

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1. Discipline and Honesty: The Engineering service/profession must be conducted in a

disciplined manner with honesty, not contravening professional dignity and well-
being.
2. Politeness and Confidentiality: Engineering Services for customers should be dealt
with in a polite manner and professional information should remain confidential
except with written or verbal consent of the customers concerned. This, however, is
not deemed to be a restriction to provide such information to the concerned authority
as per the existing laws.
3. Non-discrimination: No discrimination should be made against customers on the
grounds of religion, sex, caste or any other things applying professional knowledge
and skills.
4. Professional Work: Individuals should only do professional work in their field or
provide recommendation or suggestion only within their area of study or obtained
knowledge or skills. With regards to the works not falling within the subject of one's
profession, such works should be recommended to be done by an expert of that
subject matter.
5. Deeds which may cause harm to the engineering profession: With the exception of
salary, allowance and benefits to be received for services provided, one shall not
obtain improper financial gain of any kind or conduct improper activities of any kind,
which would impair the engineering profession.
6. Personal responsibility: An individual will be personally responsible for all works
performed in connection with his/her engineering profession.
7. State name, designation and registration no.: While signing the documents or
descriptions such as the design, map, specifications and estimates, etc. relating to the
engineering profession, the details should include the name, designation and NEC
registration no. and should be stated in a clear and comprehensible manner.
8. No publicity or advertisement must be made which may cause unnecessary effect: In
connection with the professional activities to be carried out, no publicity or
advertisement shall be made so as to cause unnecessary effect upon the customers.

Professional Ethics and Liability in Ethics

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b) Duty, Liabilities, tort case and negligence

Engineers, architects and code enforcement professionals have substantially different
viewpoints about their roles and responsibilities, and the responsibilities of others, for
ensuring adherence to the standard codes provisions in the design and construction
process.
To safeguard the interest of the Employer, the designer shall have the following general
duties:
i. To advise and consult with the employer as to any limitation of land, legislation,
restrictive covenants, rights of adjoining owners and public.
ii. To examine the site, sub-soil and surroundings.
iii. To consult with and advise the employer as to the proposed work.
iv. To prepare and submit the employer the primary design drawing (sketch) with
probable cost.
v. To elaborate and, if necessary, modify or amend he sketch, plans and then to prepare
contract documents.
vi. To consult with and advise the employer as to form of contract to be used.
vii. To bring the contract documents in their final stages.

It is the designer's duty to translate the owner's needs and requirements into drawings and
specifications to be used during construction.
During the construction phase, the architect may assist the owner with such services as
monitoring the progress of the work, verifying the specified level of quality is being
achieved, and certifying payment applications. The architect should provide unbiased
interpretations of the contract documents and give additional instructions as needed to
enable the contractor to perform its work.
The designer is liable for following things:
i. Fitness of Purpose
ii. Negligent Misstatement
iii. Statutes, Bye-Laws and Building regulations
iv. Examination of the site above and below the ground
v. Public and Private Rights
vi. Plans, Design and Specification
vii. Revision of design during construction
viii. Novel and risky design and Employer's interference in design

A tort is a civil wrong or wrongful act, whether intentional or accidental, from which
injury occurs to another.

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A tort is a legal term describing a violation where one person causes damage, injury or
harm to another person. The violation may result from intentional actions, a breach of
duty as in negligence, or due to a violation of statues. The party that commits the tort is
called the tortfeasor. A tortfeasor incurs tort liability, meaning that they will have to
reimburse the victim for the harm that they caused them.
Under most tort laws, injury suffered by the plaintiff does not have to actually be
physical. A tortfeasor may be required to pay damages for other types of harm, including
emotional distress or a violation of personal rights.
Negligence may be the failure to do what a reasonably prudent person would ordinarily
have done to prevent foreseeable harm to another under the circumstances i.e. doing of a
careless, reckless, or intentionally malicious act that a prudent and reasonable person
would not have done.
Negligence is a tort which depends on the existence of a breaking of the duty of care
owed by one person to another. Negligent behavior towards other gives them rights to be
compensated for the harm to their body, property, mental well-being, financial status or
relationship. Negligence is used in comparison to acts or omissions which are intentional
or willful.

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c) Agreement and Contract

A contract is a promise or a set of promises for the breach of which the law recognizes
duty.
A contract is an agreement concluded between two or more parties for performing or
performing any act which could be executed according to law.
In a commercial sense, a contract is a mutual agreement enforceable by law between two
or more parties that something shall be done or not done by either or both parties. By
implication, both parties thereby accept certain responsibilities and in return receive
certain benefits.
The essential elements of a Valid Contract are:
i. Agreement (Offer and Acceptance)
ii. Consideration
iii. Capacity to contract
iv. Legal Purpose
v. Legality of form
vi. Intention to create legal relations
vii. Consent to contract
The most important feature of a contract is that one party makes an offer for an
arrangement that another accepts. When two parties mutually agree to a transaction, a
contract is formed. The mutual agreement must apply to all significant or material aspect
of the agreement.
Typically, in order to be enforceable, a contract involves following elements.
1. Offer:
The offer is considered to be concerned with the making of a written or oral proposal
to give or do something as part of an agreement that may be deemed to be a legally
binding contract in certain circumstances. An offer is simply a statement or other
indication that the individual is prepared to enter into a contract with another on a
certain terms. The offer must be expressed in a manner capable of acceptance without
anything further required of the person receiving offer other than to indicate
acceptance. It must also be clear that the person making the offer is prepared to be
bound by the terms if the offer is accepted.

2. Acceptance
Acceptance is simply some indication by the person receiving the offer that the offer
is accepted. The acceptance must be clear and absolute and without conditions
attached. The objective bystander must be able to determine that the offer has been
accepted. An acceptance can be made orally or in writing. Mere silence will not create

Professional Ethics and Liability in Ethics

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an acceptance. The acceptor has right to withdraw his acceptance before it comes to
the knowledge of the offeror. The effective acceptance must be communicated.
The acceptance must be made before the offer has expired. Most offers contain a time
limit within which the offer can be accepted. Once the offer has expired, it cannot be
accepted unless the person making the offer has renewed it. No conditions can be
attached to the acceptance and the terms of the offer cannot be changed. If conditions
are attached or terms are changed, the parties are merely negotiating and may
ultimately reach agreement on the terms of the contract. The offer must be accepted
before it is withdrawn. An offer can be withdrawn before acceptance unless one of the
terms of the offer is that it will remain open for acceptance until a specified time.

3. Consideration
Consideration is known as the price of a promise and is a requirement for contracts
under common law. The idea behind consideration is that both parties to a contract
must bring something to the bargain. This means that each side must promise to give
or to do something for the other. The element of exchange is known as consideration
and is an essential element of every valid contract.
Consideration must be sufficient (i.e. recognizable by the law), but need not be
adequate (i.e. need not be a fair and reasonable exchange for the benefit of the
promise). Consideration must not be from the past. Consideration must move from the
promise. The promise to do something one is already contractually obliged to do is not
regarded as a good consideration.

Professional Ethics and Liability in Ethics

 M.Sc. in Construction Management

d) CAR and Third party liabilities

Liability insurance is a part of the general insurance system of risk financing to protect
the purchaser (the insured) from the risks of liabilities imposed by lawsuits and similar
claims.
Third party liability insurance is a coverage for damages, losses or injuries that may be
inflicted upon another party as a result of the actions of the policy holder.
It is referred to as third party liability insurance because the coverage deals with the well-
being of parties other than the insurance company or the policy holder.
It is important to protect yourself or your business from liabilities that may arise from
compensation claims filed by the persons or entities aggrieved by your actions. Moreover,
third party liability insurance also covers hefty claims or costs of legal suits that may be
filed against you by the injured party.
There are different types of Third party liability insurance. They are:
1. Commercial general liability insurance: It deals with claims that may be filed against
your business for bodily injury and property damage.
2. Professional liability insurance: It covers cases of negligence and malpractices in
service delivery.
3. Product liability insurance: It provides you protection against the costs of claims and
lawsuits associated with damage claimants suffer from using faulty products
manufactured or distributed by your business.
4. Employment practices liability insurance: It covers your business against the costs of
lawsuits filed by your former and current employees.

Contractor's All Risk (CAR) Insurances

Contractor's All Risk (CAR) insurance can cover physical damage to materials to be used
for the project – whether in transit, in storage or forming part of contract works.
This policy is extremely useful for consulting engineers, architects and financers because
it contributes to reducing the overall construction expenses and at the same time offers
efficient financial protection for all parties concerned.
Covered Risks: Contractor's All Risk provides all risk cover unless the hazard is
specifically excluded. It covers the risk of fire, lightning, explosion, flood, inundation,
rain, snow, earthquake, theft, burglary, bad workmanship, lack of skill, negligence,
human error.
Major Exclusions: This policy is subject to only few exclusions. Loss or damage to
nuclear reactions, consequential loss, loss or damage due to faulty design, loss or damage
due to war or war-like operation, etc.

Professional Ethics and Liability in Ethics

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CAR policy is a comprehensive insurance which provides complete protection against all
types of civil construction risks. It is issued commonly under the joint names of a
contractor and a client. It usually also includes public liability insurance.
Cover is available to protect against the cost of unforeseen loss or damage to building
works, machinery movement, advanced business interruptions and public liability,
installation and constructional plant. CAR policy is designed to provide protection for
building and civil works during the Contract Period.
This policy is written to enable the Contractor or Employer to comply with the insurance
requirements of the Contract and to cover the liability of the contractor for loss or damage
during the maintenance period.

Professional Ethics and Liability in Ethics

 M.Sc. in Construction Management

e) Performance of Contract and Breach of Contract

Performance of a contract (when the parties do what they agreed to do) discharges it.
Discharging a contract terminates it. Discharge usually results from performance. Most
contracts are discharged by the parties doing what they promised to do. But, sometimes
discharge can occur in other ways:
1. the occurrence or failure of a condition on which a contract is based
2. agreement of the parties
3. operation of law
4. breach of the contract
Execution of a contract by which the contracting parties are automatically discharged of
their obligations under it. Although contracts usually all for full and precise performance,
a substantial performance may be acceptable under certain circumstances, on a pro-rata
basis, or on payment of damages for the unfinished or defective performance
A contract becomes discharged once both parties have fully performed their contractual
obligations. If one party does not fully perform the contract, this will amount to breach of
contract and the other party may have a claim for damages unless the contract has been
frustrated. If the non-performance amount to a repudiatory breach (breach of condition)
the other party will be released from their obligations.
a) Discharge of Contracts by Performance
1. Complete versus Substantial Performance
i. Complete Performance: Express conditions fully occur in all aspects
ii. Substantial Performance: Performance that does not vary greatly from the
performance promised in the contract.

2. Performance to the Satisfaction of another

i. Personal Satisfaction of One of the Parties: When the subject matter of the
contract is personal, performance must actually satisfy the party (a condition
precedent)
ii. Satisfaction of a Reasonable person: Contracts involving mechanical fitness,
utility, or marketability need only be performed to the satisfaction of a
reasonable person.
iii. Satisfaction of a Third party: When the satisfaction of a third party is required,
most courts require the work to be satisfactory to a reasonable person.

b) Discharge of Contracts by Breach of Contract

Breach of contract is a failure to honor one's obligation under a contract. Breach of
contract is a legal cause of action in which a binding agreement or bargained-for
exchange is not honored by one or more of the parties to the contract by non-
performance or interference with the other party's performance.

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If he party does not fulfill his contractual promise, or has given information to the
other party that he will not perform his duty as mentioned in the contract or if by his
action and conduct he seems to be unable to perform the contract, he is said to breach
the contract.
The types of breach of contracts are:
i. Immaterial Breaches: A minor breach, a partial breach or an immaterial breach,
occurs when the non-breaching party in un entitled to an order for performance
of its obligations, but only to collect the actual amount of their damages.

ii. Material Breach: A material breach is any failure to perform that permits the
other party to the contract to either compel performance, or collect damages
because of the breach.

iii. Fundamental Breach: A fundamental breach is a breach so fundamental that it

permits the aggrieved party to terminate performance of the contract, in addition
to entitling that party to sue for damages.

iv. Anticipatory Breach: A breach by anticipatory repudiation is and unequivocal

indication that the party will not perform when the performance is due, or a
situation in which future non-performance is inevitable.

The non-breaching party has three basic choices when faced with a breach of contract-
i. Excuse the Breach: risk of having waived the particular contract requirement.

ii. Rescind the Contract: the contract is canceled and both sides are excused from
further performance and any money advanced is returned, trap for non-
breaching party which loses the right to sue or damage under contract.

iii. Terminate the Contract: commonly remedy for non-breaching party.

Professional Ethics and Liability in Ethics