Civil Engineering QS Practice Preview

© The College of Estate Management 2011
Paper 0346V5-0
Professional ethics
Contents
Learning outcomes
1. Introduction
2. What is ethics?
3. Ethics and the law
4. Ethical dilemmas
4.1 American Accounting Association Model (William May, 1990)
4.2 Laura Nash 12-question Model (Nash, 1981)
4.3 Mary Guy’s Values, Rules and Decision Model (Guy, 1990)
4.4 Case study
5. Business ethics
6. Professional ethics
7. Codes of conduct
8. Ethics and the internationalisation of property-based professions
References and Bibliography
Appendix A: RICS: Rules of Conduct for Firms 2007 – Version 5
Appendix B: RICS: Rules of Conduct for Members 2007 – Version 4
Appendix C: Professional ethics guidance note: Part 1 introduction
Appendix D: Professional ethics guidance note: Part 2 case studies

Professional ethics Paper 0346 Page 2
Learning outcomes
After studying this paper you should be able to:
 Explain the meaning and origins of ethics and comment on the relationship
between ethics and the law.
 Discuss the concepts of business ethics and professional ethics in the context
of the construction and real estate industries and the wider surveying
profession.
 Comment on the effect of culture on ethical principles, and apply this to a

study of ethics in the international construction and real estate industries.
 Explain what is meant by an ethical dilemma, and comment on the use of

formalised methods for the resolution of such.
 Discuss the issues underlying professional codes of conduct as applied to the

construction and real estate industries and comment on their likely
effectiveness.
1 Introduction
In recent years, changes in both business practice and client expectations have
brought ethical considerations to the forefront of current business thinking.
A number of recent reports have emphasised the need for greater openness and
transparency in business dealings, and have highlighted the fact that contemporary
business problems cannot always be resolved by legislation and experience.
Accordingly, many of the professional institutions have drafted guidance on ethics for
their members, and businesses are also now more willing to set out publicly their
ethical standards.
This paper begins by considering some very basic ethical concepts. These are then
used to define and clarify both business ethics and professional ethics, and to consider
the place of professional codes of conduct in the modern international construction
and real estate industries.
2 What is ethics?
Ethics is defined in the Oxford English Dictionary as ‘the science of morals’. The
word is derived from the Greek ‘ethos’, of which one meaning might be ‘the set of
moral values and principles which underpin any particular society’.
Ethics is a branch of philosophy concerned essentially with theories of ‘goodness’

and ‘badness’, of ‘right’ and ‘wrong’, of morality, and of the good of the many
contrasted with the good of the self. Sages such as Buddha and Confucius, and
religious leaders such as Jesus and Mohammed, each made recommendations about
the way people should live their lives, but the formal study of ethics really originates
with the Greek philosopher Socrates in the 5th century BC.
More recently a wide range of theories of ethics has been proposed, linking concepts
such as goodness and beauty, virtue, benevolence and self-interest, with the choice of
alternative courses of action being dependent upon their pleasant or unpleasant
consequences.
Modern philosophers tend to argue that ethics is essentially a product of our

humanity; that human beings are driven to bring about changes for the better in their
environment, and that the motives from which they act depend largely upon a
combination of their personal and collective ethical value systems. There is of course
a question of perception here, in that one person or group’s motivation might be
drawn from their particular perception of the world, which may be very different from
the way other equally rational individuals or groups see things. Culture plays a
fundamental role in determining our basic norms and values as well as the
environment in which our ethical values develop.
So how are our ethical beliefs formed, and is there such a thing as a universal set of
ethical values? On the face of it, we might argue that the vast majority of human
beings would agree, for example, that one should always tell the truth and keep one’s
word, that society should support the weak, that the exploitation of children and the
taking of human life is wrong, and so on. And yet any of us can readily think of
situations in which we would be prepared to make exceptions to most, if not all of the
above.
A modern definition of ethical values might therefore be:
‘A set of general moral beliefs, normative rules of conduct, a set of standards that
govern what one ought to do when the well-being and rights of, or duties to,
oneself, others, or institutions are at stake’ (Hong Kong Ethics Development
Centre, 1995).
In practice, it seems that in a free society the behaviour of many, perhaps most,
individuals is influenced by both their own private ethical code and the public ethical
code of the group or society in which they live and work. There are, of course, some
individuals who hold such powerful personal ethical beliefs that they are able to
sustain them in spite of external influences. However, for many others their private
ethical value systems tend to be moderated by the publicly expressed ethical values of
the various groups and societies with whom they come into contact. Furthermore it
seems that private ethical value systems evolve over time, so that for many of us, and
wider society, ethical beliefs may not be either absolute or fixed.
A modern philosopher, Mary Warnock, sums up the essence, and the contradictions,
of modern ethics in the following words:
‘Ethics is a complicated matter. It is partly a matter of general principles or even

rules, like those of manners, but is largely a matter of judgement and decision, of
reasoning and sentiment, of having the right feeling at the right time, and every
time is different’ (Mary Warnock, An intelligent person’s guide to ethics).
3 Ethics and the law

It is important to differentiate between one’s legal and ethical responsibilities.
In crude terms, the criminal law represents a set of rules by which the society is
governed, and prescribes penalties for those who fail to abide by it. On the other
hand, the civil law basically sets out the rights and liabilities arising from
relationships between individuals. Here transgression generally results not in the
imposition of a penalty but in ensuring restitution to the injured party so that they are,
as far as possible, put in the same position as they would have been had the
infringement of their rights not occurred.
Ethical issues, however, impose a higher level of responsibility, in that they are
concerned not only with legal but also with moral obligations. Ethical responsibilities
are therefore concerned not with ‘black and white’, objective definitions of right and
wrong, but with personal value judgements. The resolution of ethical issues therefore
normally involve a subjective decision based upon one’s own personal ethical values.
However, the distinction between law and ethics is not a clear-cut one. For example,
the ‘human rights’ legislation enacted in recent years in various parts of the world is
often largely concerned with what would normally be considered to be ‘moral’ rights.
The right to free speech, the right to free choice of employment, the right to just and
fair working conditions and remuneration, the right to reasonable periods of rest and
leisure, and the right to privacy could all be seen to be essentially moral rights which
now are enshrined in the law. Legislation such as this blurs the boundary between
ethics and the law.
4 Ethical dilemmas
Ethical dilemmas are defined as those issues that require us to use an ethical value
system to determine a course of action – that is, an issue that cannot be satisfactorily
determined by the use of facts and technical rules alone. They are often, but not
always, management issues involving both people and a moral question – for
example, whether or not to report a colleague whom you suspect of offering or
accepting corrupt payments.
A variety of theoretical approaches have been proposed as to the guiding principles to

follow in determining how we might react to such questions. Some of the most
important include whether the decision should be based primarily upon:
 self-interest (e.g. the ethical egoism theory proposed by M G Singer, 1961);

 the greatest good of the greatest number (e.g. utilitarianism proposed by
Jeremy Bentham 1748–1832 and John Stuart Mill 1806–73);
 doing one’s duty in fulfilling obligations irrespective of the consequences
(John Locke 1632–1704 and Jean-Jacques Rousseau 1712–78);
 ‘doing unto others as you would have them do unto you’ (as popularised by
Immanuel Kant 1724–1804);
 principles of ‘natural justice’, which focus on fair procedures and an equitable
distribution of benefits and burdens (John Rawls 1971);
 some form of group consensus – for example, actions are defined as morally
right if all of the stakeholders in a particular situation might reasonably think
the proposed actions would be acceptable by anyone looking at the matter in
an impartial and informed way (the NORM theory proposed by Ronald Green,
1994).
In addition to these basic theoretical approaches, a number of authors have also

attempted to develop checklists to aid the analysis and resolution of ethical problems.
A simple example is the following set of nine general rules of thumb proposed by
Goodpaster (1984):
1. avoid harming others;

2. respect the rights of others (e.g. adopt the ‘Golden Rule’);
3. do not lie or cheat;
4. keep promises and contracts;
5. obey the law;
6. prevent harm to others;
7. help those in need;
8. be fair;
9. reinforce these imperatives in others.
Some more complex approaches are outlined below.

4.1 American Accounting Association Model (William May, 1990)

Step 1 Determine the facts – what, who, where, when, how?
Step 2 Define the ethical issues. List the significant stakeholders. Define the ethical
issues.
Step 3 Identify major principles, rules, values: e.g. integrity, accountability, respect
for persons, profit.
Step 4 Specify the alternatives. List the major alternative courses of action,
including those that represent some form of compromise.
Step 5 Compare values and alternatives. Determine if there is one principle or value,
or combination, which is so compelling that the proper alternative is evident.
Step 6 Assess the consequences. Identify short and long, positive and negative
consequences for the major alternatives.
Step 7 Make your decision. Balance the consequences against your primary
principles or values and select the alternative that best fits.
4.2 Laura Nash 12-question Model (Nash, 1981)

This model emphasises practicability rather than abstract philosophical concepts. The
questions to be asked are:
1. Have you defined the problem accurately? Make available all precise facts.
2. How would you define the problem if you stood on the other side of the fence?
Consider alternative viewpoints.
3. How did this situation occur in the first place? Consider all background
information.
4. To whom and what do you give your loyalties as a person and as a member of
the corporation? Weigh conflicting values.
5. What is your intention in making this decision? Can you justify your action?
6. How does this intention compare with the likely results? Are good intentions
well served by the results?
7. Whom could your decision or action injure? Consider all possible effects.
8. Can you engage the affected parties in a discussion of the problem before you
make your decision? Involve all primary stakeholders.
9. Are you confident that your position will be as valid over a long period of time
as it seems now? Consider long-term consequences.
10. Could you disclose, without qualm, your decision or action to your boss, your
CEO, the board of directors, your family, or society as a whole? Is your action
able to survive disclosure and public scrutiny?
11. What is the symbolic potential of your action if understood and if

misunderstood? Assess the likely perceptions of others.
12. Under what conditions would you allow exceptions to your stand? Are such
exceptions warranted?
4.3 Mary Guy’s Values, Rules and Decision Model (Guy, 1990)
Values
Before offering a decision model, Guy suggests that one might keep 10 ‘core values’
in mind. By evaluating how these values relate to an issue under consideration, and
by analysing who the stakeholders are in the decision, the ethical implications of an
action become clearer.
1. Caring – treating people as ends in themselves, not as means to ends.

2. Honesty – being truthful and not deceiving or distorting the facts.
3. Accountability – accepting the consequences of one’s actions and the
responsibility for one’s decisions and their consequences.
4. Promise keeping – keeping one’s commitments.
5. Pursuit of excellence – striving to be as good as one can be. Being diligent,
industrious, committed, becoming well informed and well prepared.
6. Loyalty – being faithful and loyal to those with whom one has dealings.
7. Fairness – refraining from taking undue advantage of another’s adversities.
8. Integrity – using independent judgement and avoiding conflicts of interest,
refraining from self-aggrandisement, and resisting economic pressure.
9. Respect for others – recognising each person’s right to privacy and self-
determination and having respect for human dignity.
10. Responsible citizenship – having one’s actions accord with societal values.
Rules
Guy also suggests five rules which integrate these values and might be of assistance
in codifying one’s ethical decision making:
Rule 1 Consider the well-being of others, including non-participants. This rule

emphasises caring and respect for others.
Rule 2 Think as a member of the community, not as an isolated individual. This

emphasises loyalty, integrity, respect for others, and responsible citizenship.
Rule 3 Obey the law, but do not depend solely on it. This again emphasises integrity
and responsible citizenship.
Rule 4 Ask ‘What sort of person would do such a thing?’ This emphasises all the
values by calling each into question.
Rule 5 Respect the customs of others, but not at the expense of your own ethics.
This emphasises accountability, fairness, integrity, and respect for others.
Decision Model
1. Define the problem. Isolate the key factors in question and diagnose the
situation to define the basic problem and to identify the limits of the situation.
2. Identify the goal to be achieved. It is essential that a goal is clearly defined to
avoid going astray.
3. List all possible solutions to the problem. All alternatives that will address the
problem and achieve the goal are considered.
4. Evaluate each alternative to determine which best meets the requirements of
the situation. This requires a thorough analysis of each alternative, which
involves measuring the benefits, costs and risks of each, as well as identifying
the likely intended and unintended consequences.
5. Identify the one course of action that is most likely to produce the desired
consequences within the constraints of the situation. This requires selecting the
alternative that maximises the most important values and holds the most
promise of achieving the goal, while solving the problem as effectively as
possible.
6. Make a commitment to the choice and implement it. This requires converting
the decision into action.
7. Which model to use for analysing ethical problems depends entirely upon
individual personal preferences. If required, any of the models could be
modified to suit individual needs. The important thing is that such models can
provide a sound and sensible template to aid the individual to make well-
informed, carefully thought out and justifiable decisions.
4.4 Case study

The following case study is freely adapted from Ethics for Professionals (Hong Kong
Ethics Development Centre, undated) and is given purely to indicate the typical use of
a theoretical ethical model in analysing an ethical problem. Note that the analysis
presented is not necessarily ‘correct’, as it will reflect the ethical values of the person
making the analysis. The purpose here is simply to show how the analysis process
works.
In this case the technique used is the NORM (Neutral, Omnipartial, Rule-Making)
theory, but any other recognised technique could be used to analyse the case in a
similar way
CASE: Jim: offering advantages

Jim is the senior contracts manager for an international construction company. He is
attempting to break into a new market in a relatively undeveloped country. Standards
of business practice are relatively lax, and ‘under the table’ payments appear to be the
norm before firms can even get on to the tender list for large projects. Although the
internal policy of Jim’s firm prohibits offering any advantage to secure business, Jim
feels he will be at a significant disadvantage if he follows the firm’s policy in this
case. ‘My superiors simply do not understand the situation here. When in Rome, act
as the Romans do.’
Should Jim offer additional payments in return for ‘favours’ as everybody else
appears to be doing? Would this be in the best interest of his firm? In violating the
firm’s internal policy, is Jim running a worthwhile risk?
The NORM theory

The NORM theory embodies a three-step process:
Step 1 Propose a moral rule encapsulating the essential elements of the dilemma.
Step 2 Consider the effect of that rule on the interest of each stakeholder concerned.
Step 3 If necessary, revise the proposed rule.
Omnipartiality requires us to consider the issue from the standpoint of each

stakeholder, to strive to stand in their shoes, to understand their interests and beliefs,
and to measure our proposed rule in terms of its impact on ourselves if we were in
this person’s position. If, on balance, all stakeholders would want to live in a world
where this rule prevails, the rule can be accepted.
Test the case using NORM theory
 Proposed Moral Rule 1

In a country where everybody uses ‘under the table’ payments to do business,
it is acceptable for Jim to do the same in spite of the risk of violating his firm’s
internal policy prohibiting the offering of any advantage in securing business.
Jim must then ask whether he would, omnipartially, accept this rule if he were
to put himself into the shoes of all relevant parties. In this case Jim identifies
the other parties as his employer, other managers in the same firm, his wife and
family, himself, the new market, and his home market.
His employer would not be happy, as his actions could impair the image of the
firm as well as betraying the trust of the firm in its employees that they will
adhere to internal policies specifically stated. The business secured may not be
sufficient to balance the loss of reputation and confidence. The firm might
think twice before moving into the market, and might distrust Jim in the future.
Other managers in the firm might feel pressurised by what Jim is doing. They
might well feel at a disadvantage if they did not follow suit. If they did, they
would experience the same concerns Jim has and may inherit some of the
consequences of his actions, such as being distrusted by the firm or losing the
chance to do business elsewhere.
Jim’s wife and family would feel very insecure. If Jim got away with his
actions they might enjoy some short-term prosperity. If not, Jim might easily
lose his job. He might also be charged with violating anti-bribery laws and
could conceivably end up in prison.
The new market might gain financially if not morally. The people involved
obviously consider that bribery is acceptable, and without additional payments
nothing could be achieved. Their appetites whetted, they may well expect more
each time until eventually investors’ interest is curtailed and entrepreneurs take
their business elsewhere. The new market may well lose out in the long run.
Jim’s home market might suffer too. Economic gains to the company may be
short term, and double standards would inevitably arise. The financial boom
expected in the new market may well be affected by the ‘under the table’
dealings, and costs would rise. At its worse, this corrupt practice might erode
the company’s position in its home market, leading to a collapse of whatever
integrity and reputation had been built up.
On balance, none of the stakeholders would want to live in a world where this
rule prevails and thus, on the basis of the above analysis, this rule cannot be
accepted.

In doing business in a country where everybody uses ‘under the table’
dealings, Jim should only do the same if he had informed his employer of the
circumstances and asked the firm to waive their internal policy.
Omnipartially, Jim again puts himself into the shoes of his employer, his
colleagues, his wife and family, the new market, and his home market.
His employer would be in a dilemma, as Jim once was; but Jim is in a

different position, being only an employee. The decision making now rests
with the entrepreneur, and he must decide whether he would want his firm to
develop business in the new market. If he wants the market desperately, or if
the rewards appear sufficiently large, perhaps he will consider waiving the
policy as far as that country was concerned. That would, however, mean a
double standard, and it might be difficult to command respect from other
customers if his action become widely known.
Jim’s colleagues would see that exceptions to the rule could be granted if the
need should arise or if the rewards were perceived to be sufficiently great.
With this precedent, they would be assured that the policy of the firm could
always be changed to facilitate profit making. In the foreseeable future it is
likely that they would seek other concessions, and the firm might then be seen
to be morally bankrupt.
Jim’s wife and family should feel more secure, the responsibility now being
shifted to the employer. Jim would be acting with consent, but he would still
be acting against his own internal ethical principles. It would not be easy for
him subsequently to lecture his children on honesty and integrity. He would
become a walking example of compromise and compliance.
The new market might well thrive, but successful corruption could easily lead
to more of the same, with the likelihood that, in future, investors would either
move elsewhere or raise their prices in order to recover the money spent on
corrupt payments.
Jim’s home market could easily suffer in the same way as with Proposed
Moral Rule 1.
Again the outcome of the analysis is not attractive, and therefore this rule
would also, on balance, be considered morally unacceptable.

In considering doing business in a country where everybody uses ‘under the
table’ dealings, the firm should weigh financial gain against ethical
considerations. It should not put its staff into a quandary or endanger the good
name of the firm. The bottom line should be adherence to the law and the
firm’s internal policy.
Omnipartially, Jim again assesses the interest of his employer, his wife and
family, his colleagues, the new market, and his existing home market.
Jim’s employer would be doing a lot of soul searching. If the decision was
made to go for financial gain at the expense of everything else, the firm would
have to carry a mighty responsibility. The fact that the dealings might become
public, or that firm could be charged with breaking anti-bribery laws, or that
the position of staff could be jeopardised, not to mention the potential for
damage to the company’s name and reputation, should be enough to make the
potential financial gain look much less worthwhile. Given the risks, an
enterprising employer would be likely to look for new markets elsewhere.
If the firm’s decision were to give up the corrupt market, at least for the time
being, Jim’s wife and family would feel more secure and could be proud of
the fact that Jim had maintained his own moral code.
Jim’s colleagues would be happier, and those priding themselves on their

integrity would feel happier working for a firm with integrity.
The new market would lose a potential investor and a chance of development.
If others adopted the same stance it would eventually become clear that
corruption was not a sustainable strategy.
Jim’s home market would remain intact, and the firm would maintain its
reputation for honesty and fairness.
On balance, on the outcome of this analysis, this rule would be supported by

the stakeholders concerned and would therefore be accepted.
5 Business ethics
Many ethical problems are often most apparent in the ways in which we choose to do
business. Business ethics may be considered to be the study and analysis of moral
principles and moral decision making as it applies to the business world. We therefore
need to apply the ethical principles set out above to the solution of business problems.
Note that the ‘business ethics’ inherent in any particular marketplace are very much
determined by local custom and practice. As indicated in the case study above, they
may lead to serious conflicts between the prevailing norm and the business policies of
companies and/or people who customarily operate under a different set of rules.
Cadbury (1987), for example, noted that in international business there are stark
differences between different societies regarding the legitimacy of special payments
to win orders or contracts – the existence of cultural relativism. However, others
(Wellman, 1963) have argued strongly in favour of an absolutist approach to business
ethics.
Irrespective of whether one takes an absolutist or a culturally relative view, it is now

generally acknowledged that a well publicised, robust set of ethical business
standards can provide a considerable marketing advantage.
6 Professional ethics
The concept of professional ethics, as representing the standard of performance and
service the general public can expect to receive from a professional practitioner, has
historically been a major issue. From as early as the 19th century professional
societies gave members a freedom to practise, secure in the knowledge that both they
and their clients were protected by professional codes of conduct.
The need for such codes was restated in 1971 by the Ormrod Committee on Legal
Education, which said that:
‘A profession involves a particular kind of relationship with clients or patients

arising from the complexity of the subject matter, which deprives the client of the
ability to make informed judgements for himself and so renders him to a large
extent dependent upon the professional man. A self-imposed code of professional
ethics is intended to correct the imbalance in the relationship between the
professional man and his client and resolve the inevitable conflicts between the
interests of the client and the professional man or of the community at large.’
Note that in this area the concept of evolving (i.e. culturally relative) ethical
frameworks is generally considered to be of major importance. For example, the
Royal Institution of Chartered Surveyors (RICS), in a recent discussion paper (RICS,
2000), stated that:
‘Professional ethics is a process, i.e. ethics is not a fixed text which can be learnt
once. It is a way of reviewing behaviour against constantly changing standards.
What may be ethical today, or in a particular society, may be viewed differently
by others or at another time …. What is perceived as ethical depends on the
viewpoint of the individual. However, this can be influenced by a variety of
factors including published codes and statements.’
There are many definitions of professional ethics, but that endorsed by RICS in 2000
is perhaps typical of many in the traditional sentiment it expresses. It clearly has its
roots firmly anchored in the duty-based 17th and 18th-century philosophies of John
Locke and Jean-Jacques Rousseau, and in the 18th and 19th-century utilitarianism of
Jeremy Bentham and John Stuart Mill.
‘[Professional ethics is the] giving of one’s best to ensure that clients’ interests are
properly cared for, but in doing so the wider public interest is also recognised and
respected’ (Professional Ethics and the Rules of Conduct of the Royal Institution
of Chartered Surveyors, H Land FRICS, CPD Study Pack, College of Estate
Management).
7 Codes of conduct
Considerable research has been carried out into the formulation and effectiveness of
both corporate and professional codes of conduct. Most of this work, however (e.g.
Chatov, 1980; White and Montgomery, 1980; Sanderson and Varner, 1984; Webley,
1993), has concerned corporate American codes. In addition to issues such as bribery
and conflict of interest, other issues commonly included are ‘green’ issues,
discrimination and harassment, labour relations, safety, and fair remuneration.
Langlois and Schlegelmilch (1990) discovered differences between European and
USA codes, but only in areas of employee relations and politics.
Considerable research has also been carried out into the effectiveness of the codes in
assuring standards. Stead et al. (1990) recommend that, to be most effective, codes
should be developed in an open, participative environment involving as many
employees as possible. It follows that professional associations might also wish to
involve their memberships in developing their codes of conduct, and Trevino and
McCabe (1994) found that the active involvement of members in code development,
interpretation and review was a significant factor in ensuring general acceptance.
However, research has also suggested that the true motivation for companies to
produce corporate codes of conduct may have little to do with ensuring standards and
much more to do with largely non-ethical ends. Maintaining corporate profits
(Cressey and Moore, 1983) and protecting the corporation against criminal liability or
other damage stemming from employee misconduct (Stevens, 1994) have been shown
to be the prime motivation in many cases. Among the professions, critical studies of
the codes of conduct of accountants (Mitchell et al. 1994) and solicitors (Carver,
1995) have revealed that the primary reasons for code adoption have been to enhance
status and protect members’ interests. In many cases the codes are imprecise and
largely incapable of objective application. As an example, preliminary research
(Smith, 1995) into the requirements of the codes of conduct of the various
professional surveying bodies in South-East Asia shows that, although all provide for
various penalties to be imposed on members whose conduct is deemed to be
‘unethical’, this concept is only defined in the most subjective of terms. The
Australian Institute of Quantity Surveyors, for example, states that Members are
required to ‘provide professional services of a high standard’ and to ‘maintain a high
standard of integrity and taste’, whilst the Hong Kong Institute of Surveyors requires
that ‘No Member shall conduct himself in a manner unbefitting a Member of the
Institute’. None, however, make any attempt to define what objective standards will
be used to judge whether or not members actually comply.
In terms of the penalties for transgression, Allmon and Grant (1990) discovered that
code transgression could be widespread without apparent guilt or remorse. Hence
Clutterbuck (1992) and Ford and Richardson (1994) advocate rewards for code
adherence and sanctions for violations. Studies suggest that codes may be effective in
promoting ethical behaviour when combined with sanctions (Singhapakdi and Vitell,
1990; Weeks and Nantel, 1992). Despite the lack of objectivity however, Pitt and
Groskaufmanis (1990) found that 68% of employers surveyed had terminated an
employee contracts for code violation, and 32% claimed to have formal enforcement
measures. Many professions have corresponding disciplinary procedures.
There is, therefore, a need for the development of clearer and more objective
professional and corporate codes of conduct that are soundly based in ethical theory.
Appendices C and D, although superseded, provide some useful examples of ethical

dilemmas and issues.
8 Ethics and the internationalisation of property-

based professions
The comments made so far largely concern the application of ethical theories to
corporate business. However, there are good reasons to believe that the construction
industry differs significantly from more conventional corporate business in several
important respects.
For one thing, it is inherently more mobile and essentially transient. Enterprises are
often established in a particular region for the construction of a single project – what
has been called the ‘temporary multi-organisation’. This has a structure which
involves mobilising and organising large quantities of resources in a very short time,
which after completion of the project flow away to reform somewhere else in a
different guise. The ethical perceptions of professionals and companies associated
with this process are not therefore likely to be precisely the same as those working for
organisations which have a more established and secure base.
In recent years the world’s construction industry has become more and more
international. The major construction companies of the developed world are
increasingly looking to gain a larger proportion of their work from the developing
world. The construction workforce is becoming more mobile, and this
internationalisation automatically gives rise to the need for the supporting professions
(architects, engineers and quantity surveyors) to follow suit. Nowhere is this trend
more visible than in South-East Asia, where the demand for construction work in the
many rapidly developing countries of the region has been almost unprecedented. The
need for professional services to support the resultant construction boom has been
largely filled by practices based in established commercial centres such as Hong
Kong, Singapore and Australia.
This internationalisation of the construction professions involves practitioners coming

into intimate contact with indigenous construction industries in countries where local
customs, legal systems, culture and business practice may be very different from
those generally accepted in the developed world. In the developed world the various
construction professions operate under strict ethical codes of conduct developed and
monitored by the professional institutions against the prevailing cultural background.
Most are framed in broad terms that assume a particular approach to business
dealings. The need for these professionals to operate, often in competition with each
other, in countries that do not observe the same cultural and business norms, while
still being governed by their institution’s professional code of conduct, can give rise
to considerable ethical problems.
Quantity surveyors are perhaps more prone than most in this regard, dealing as they
do with the procurement of construction works, with contracts and, perhaps most
importantly, with valuation and payment.
The need for a sensible and generally acceptable ethical ‘level playing field’ in
international business in general has already been recognised. The Caux Roundtable
principles (Business Ethics, undated) were developed to set ‘a world standard against
which business behaviour can be measured’. Some of the larger construction
companies have also published their own ethical codes (e.g. the Statement of ethics
and business principles published by John Laing plc – Laing, 1997). RICS has
recently given considerable thought to these issues, and the guidance notes included
as Appendices C and D are considered by the Institution to represent the standards of
behaviour expected of all practising chartered surveyors, wherever in the world they
practise. In the event of disciplinary action, therefore, it will be assumed that these
standards will apply unless the member concerned is able to justify, to the satisfaction
of the Institution, any departure from the guidance.
RICS clearly appreciates that what is accepted as ethical behaviour depends upon the
viewpoint of the individual but within the context of the view of society as a whole.
This being the case, any code must either be restricted to particular countries, or
broad enough to be acceptable in all possible situations in which chartered surveyors
might find themselves. In formulating their guidance (see Appendix C), the
Institution has clearly chosen to follow the latter course.
SELF-ASSESSMENT QUESTION
Read the ethical dilemmas set out on page 6 of Appendix C and attempt to decide how
you would resolve them.
Check your assessment against the analysis set out in Appendix D.

REFERENCES AND BIBLIOGRAPHY

Allmon D E and Grant J (1990) ‘Real Estate Sales Agents and the Code of Ethics: a
Voice Stress Analysis’, Journal of Business Ethics, 9: 807–812.
Business Ethics (undated) ‘The Caux Principles’, available from 52 South 10th Street,
Suite 110, Minneapolis, MN 55403 612-962-4700, USA.
Cadbury, Sir A (1987) ‘Ethical Managers Make Their Own Rules’, Harvard Business
Review, 65(5): 69–73.
Carver A (1995) ‘Ethics and the Civil Society: John Stewart Mill’s Legacy in the
1990s’, Chapter 3 in S Stewart and G Donleavy (eds) Whose Business Values? Some
Asian and Cross-cultural Perspectives, Hong Kong: Hong Kong University Press.
Chatov R (1980) ‘What Corporate Ethics Statements Say’, California Management

Review, 22(4): 20–29.
Clutterbuck D (1992) The Role of the Chief Executive in Maintaining an Ethical

Climate, London: Clutterbuck Associates.
Cressey D and Moore C A (1983) ‘Managerial Values and Corporate Codes of

Ethics’, California Management Review, 25: 53–77.
Ford R C and Richardson W D (1994) ‘Ethical Decision-Making: a Review of the

Empirical Literature’, Journal of Business Ethics, 13: 205–221.
Goodpaster K E (1984) Ethics in Management, MA: Harvard Business School.
Guy M (1990) Ethical Decision Making in Everyday Work Situations, New York:
Quorum Books.
Hong Kong Ethics Development Centre (undated) Ethics for professionals

(architecture, engineering and surveying): A resource portfolio for Hong Kong
Universities.
Laing (1997) Statement of ethics and business principles, John Laing plc.
Langlois C C and Schlegelmilch B B (1990) ‘Do Corporate Codes of Ethics Reflect

National Character? Evidence From Europe and the United States’, Journal of
International Business Studies, fourth quarter: 519–539.
Leisinger K M (1995) ‘Corporate Ethics and International Business: Some Basic

Issues’, Chapter 9 in S Stewart and G Donleavy (eds) Whose Business Values? Some
Asian and Cross-cultural Perspectives, Hong Kong: Hong Kong University Press.
May W W (ed.) (1990) Ethics in the Accounting Curriculum: Cases and Readings,
American Accounting Association.
Mitchell A, Puxty T, Sikka P and Willmott H (1994) ‘Ethical Statements as

Smokescreens for Sectional Interests: The Case of the UK Accountancy Profession’,
Journal of Business Ethics, 13(1): 39–51.
Nash L (1981) ‘Ethics without the sermon’, Harvard Business Review, 59: 79–90.
Pitt H L and Groskaufmanis K A (1990) ‘Minimizing Corporate Civil and Criminal

Liability: A Second Look at Corporate Codes of Conduct’, The Georgetown Law
Journal, 78: 1,559.
RICS (2000) Guidance Notes on Professional Ethics, Professional Ethics Working

Party, RICS, February 2000.
RICS (2010) ‘Maintaining professional and ethical standards’, helpsheet, RICS, April
2010.
Sanderson R and Warner I (1984) ‘What’s Wrong With Corporate Codes of

Conduct?’, Management Accounting, 66: 28–35.
Singhapakdi A and Vitell S J (1990) ‘Marketing Ethics: Factors Influencing

Perceptions of Ethical Problems and Alternatives’, Journal of Macromarketing,
spring: 4–18.
Smith A J (1995) ‘Professional ethics in quantity surveying’, discussion paper

presented to the 1996 Pacific Association of Quantity Surveyors Annual General
Meeting, Hong Kong.
Stead W E, Worrell D L and Stead J G (1990) ‘An Integrative Model for

Understanding and Managing Ethical Behaviour in Business Organizations’, Journal
of Business Ethics, 9(3): 233–242.
Stevens B (1994) ‘An Analysis of Corporate Ethical Code Studies: Where Do We Go

From Here?’, Journal of Business Ethics, 13: 63–69.
Trevino L K and McCabe D (1994) ‘Meta-learning About Business Ethics: Building

Honourable Business School Communities’, Journal of Business Ethics, 13: 405–416.
Warnock M (1998) An intelligent person’s guide to ethics, London: Gerald

Duckworth and Company.
Webley S (1993) Codes of Business Ethics – Why Companies Should Develop Them,
London: Institute of Business Ethics.
Weeks W A and Nantel J (1992) ‘Corporate Codes of Ethics and Sales Force
Behaviour: A Case Study’, Journal of Business Ethics, 11: 753–760.
Wellman C (1963) ‘The Ethical Implications of Cultural Relativity’, Journal of

Philosophy, 60(7): 169–94.
Appendix A:
RICS: Rules of Conduct for Firms 2007 –
Version 5
Please turn overleaf for Appendix A.
Regulation
RULES OF
CONDUCT FOR FIRMS
04 JUNE 2007
VERSION 5
WITH EFFECT FROM 01 JANUARY 2012
RULES
Regulation
Foreword
The Rules of Conduct for Firms apply to firms that RICS regulates. They cover those matters
which are dealt with at firm level. The Rules focus on our regulatory goals and adopt the five
principles of better regulation:
• Proportionality
• Accountability
• Consistency
• Targeting
• Transparency
For firms requiring further guidance, we have prepared a series of help sheets on different
aspects of the Rules. These can be found at www.rics.org/regulation.
These Rules provide a strong foundation for RICS and for the firms it regulates, helping
to protect the public and uphold the reputation of the profession.
Eve Salomon James M Allan

Chair Honorary Secretary
Regulatory Board
04 June 2007 | Version 5. 01 January 2012 03

Regulation
These Rules of Conduct for Firms are made by the Regulatory Board of the Royal Institution of
Chartered Surveyors (RICS) under Article 18 of the Supplemental Charter 1973 and Bye-Law 5
of RICS Bye-Laws. Version 5 of these Rules shall apply from 01 January 2012.
Scope
These Rules set out the standards of professional conduct and practice expected of Firms
registered for regulation by RICS. These Rules do not repeat obligations placed on Firms by
the general law, for example in the areas of discrimination and employment.
Not every shortcoming on the part of a Firm, nor failure to comply with these Rules, will
necessarily give rise to disciplinary proceedings. However, a failure to follow any guidance
associated with the Rules is a factor that will be considered should it be necessary to examine
the activities of a Firm. In such circumstances the Firm may be asked to justify the steps it took
and this may be taken into account.
A Firm should be guided as much by the spirit of the Rules as by the express terms.
Part I General
Interpretation
1. In these Rules, unless the context otherwise requires:
Providing a surveying service to the public means acting to provide a service(s)
considered by RICS to be within those which are the responsibility of RICS’ Professional
Groups to professional, corporate, institutional and all other clients;
Contact Officer means the individual designated by the Firm to be the main liaison point
between the Firm and RICS and the person authorised by the Firm to submit the Firm’s
Annual Return;
Firm means
a. the whole or part of any body corporate; or
b. a partnership; or
c. a limited liability partnership; or
d. an unincorporated practice of a sole practitioner concerned with the business
of surveying or providing other related services, which is regulated by RICS; or
e. an equivalent in any of the world regions to any of the above in a–d.
04 04 June 2007 | Version 5. 01 January 2012

Communication
2. RICS will communicate with Firms by any of the following:
a. post
b. fax
c. e-mail
d. telephone
e. in person
Part II Conduct of Business

Professional behaviour
3. A Firm shall at all times act with integrity and avoid conflicts of interest and avoid any
actions or situations that are inconsistent with its professional obligations.
Competence
4. A Firm shall carry out its professional work with due skill, care and diligence and with
proper regard for the technical standards expected of it.
Service
5. A Firm shall carry out its professional work with expedition and with proper regard for
standards of service and customer care expected of it.
Training and Continuing Professional Development (CPD)

6. A Firm shall have in place the necessary procedures to ensure that all its staff are properly
trained and competent to do their work.
Complaints handling
7. A Firm shall operate a complaints handling procedure and maintain a complaints log.
The complaints handling procedure must include an Alternative Dispute Resolution (ADR)
mechanism that is approved by the Regulatory Board.
Clients’ money
8. A Firm shall preserve the security of clients’ money entrusted to its care in the course of
its practice or business.
Professional indemnity insurance

9. A Firm shall ensure that all previous and current professional work is covered by adequate
and appropriate professional indemnity insurance cover which meets standards approved
by the Regulatory Board.

Regulation
Part III Firm Administration

Advertising
10. A Firm shall promote its professional services only in a truthful and responsible manner.
Solvency
11. A Firm shall ensure that its finances are managed appropriately.
Arrangements to cover the incapacity or death of a sole practitioner

12. A Firm which has a sole principal (i.e. a sole practitioner or a sole director in a corporate
practice) shall have in place appropriate arrangements in the event of that sole principal’s
death or incapacity or other extended absences.
Use of designations
13. A Firm registered for regulation must display on its business literature, in accordance with
the Regulatory Board’s published policy on designations, a designation to denote that it is
regulated by RICS.
Information to RICS
14. A Firm shall submit in a timely manner such information about its activities, and in such
form, as the Regulatory Board may reasonably require.
Co-operation
15. A Firm shall co-operate fully with RICS staff and any person appointed by the
Regulatory Board.

Regulation
RICS HQ Advancing standards in land, property and construction.

Parliament Square
London SW1P 3AD RICS is the world’s leading qualification when it comes to
United Kingdom professional standards in land, property and construction.
Worldwide media In a world where more and more people, governments, banks and
enquiries: commercial organisations demand greater certainty of professional
E pressoffice@rics.org standards and ethics, attaining RICS status is the recognised
Contact Centre: mark of property professionalism.
E contactrics@rics.org
T +44 (0)870 333 1600 Over 100 000 property professionals working in the major established
F +44 (0)20 7334 3811 and emerging economies of the world have already recognised the
importance of securing RICS status by becoming members.
RICS is an independent professional body originally established
in the UK by Royal Charter. Since 1868, RICS has been committed
to setting and upholding the highest standards of excellence and
integrity – providing impartial, authoritative advice on key issues
affecting businesses and society.
RICS is a regulator of both its individual members and firms enabling
it to maintain the highest standards and providing the basis for
unparalleled client confidence in the sector.
RICS has a worldwide network. For further information simply contact
the relevant RICS office or our Contact Centre.
Europe Asia Americas Oceania

(excluding Room 2203 60 East 42nd Street Suite 2, Level 16
United Kingdom) Hopewell Centre Suite 2918 1 Castlereagh Street
Rue Ducale 67 183 Queen’s Road East New York, NY 10165 Sydney
1000 Brussels Wanchai USA NSW 2000
Belgium Hong Kong Australia
T +32 2 733 10 19 T +852 2537 7117 T +1 212 847 7400 T +61 2 9216 2333
F +32 2 742 97 48 F +852 2537 2756 F +1 212 847 7401 F +61 2 9232 5591
ricseurope@rics.org ricsasia@rics.org ricsamericas@rics.org info@rics.org.au
United Kingdom Africa Middle East India

Parliament Square PO Box 3400 Office F07, Block 11 48 & 49 Centrum Plaza
London SW1P 3AD Witkoppen 2068 Dubai Knowledge Village Sector Road
United Kingdom South Africa Dubai Sector 53, Gurgaon – 122002
United Arab Emirates India
T +44 (0)870 333 1600 T +27 11 467 2857 T +971 4 375 3074 T +91 124 459 5400
F +44 (0)20 7334 3811 F +27 86 514 0655 F +971 4 427 2498 F +91 124 459 5402
contactrics@rics.org ricsafrica@rics.org ricsmiddleeast@rics.org ricsindia@rics.org
Appendix B:
RICS: Rules of Conduct for Members 2007 –
Version 4
Please turn overleaf for Appendix B.
Regulation
RULES OF
CONDUCT FOR MEMBERS
04 JUNE 2007
VERSION 4
WITH EFFECT FROM 01 JANUARY 2011
RULES
Regulation
Foreword
The Rules of Conduct for Members apply to all members worldwide. They cover those matters
for which individual members are responsible and accountable in their professional lives.
The rules focus on our regulatory goals and adopt the five principles of better regulation:
• Proportionality
• Accountability
• Consistency
• Targeting
• Transparency
For members requiring further guidance, we have prepared a series of help sheets on different
aspects of the rules. These can be found at www.rics.org/regulation.
These Rules provide a strong foundation for RICS and its members, helping to protect the
public and uphold the reputation of the profession.
Eve Salomon James M Allan

Chair Honorary Secretary
Regulatory Board

Regulation
These Rules of Conduct for Members of RICS are made by the Regulatory Board of the Royal
Institution of Chartered Surveyors (RICS) under Article 18 of the Supplemental Charter 1973
and Bye-Law 5 of RICS Bye-Laws. Version 4 of these Rules shall apply from 01 January 2011.
Scope
These Rules set out the standards of professional conduct and practice expected of Members
of RICS. These Rules do not repeat obligations placed on Members by the general law, for
example in the areas of discrimination and employment.
Not every shortcoming on the part of a Member, nor failure to comply with these Rules, will
necessarily give rise to disciplinary proceedings. However, a failure to follow any guidance
associated with the Rules is a factor that will be considered should it be necessary to examine
the behaviour of a Member. In such circumstances a Member may be asked to justify the steps
they took and this may be taken into account. A Member should be guided as much by the
spirit of the Rules as by the express terms.
Part I General
Interpretation
1. In these Rules, unless the context otherwise requires, ‘Member’ means a Chartered Member,
non-Chartered Member, Honorary Member or a member of the attached classes.
Communication
2. RICS will communicate with Members by any of the following:
a. post
b. fax
c. e-mail
d. telephone
e. in person

Part II Personal and Professional Standards
Ethical behaviour
3. Members shall at all times act with integrity and avoid conflicts of interest and avoid
any actions or situations that are inconsistent with their professional obligations.
Competence
4. Members shall carry out their professional work with due skill, care and diligence and
with proper regard for the technical standards expected of them.
Service
5. Members shall carry out their professional work in a timely manner and with proper
regard for standards of service and customer care expected of them.
Continuing Professional Development (CPD)

6. Members shall plan, undertake, record and evaluate appropriate continuing professional
development and, on request, provide RICS with evidence that they have done so.
Solvency
7. Members shall ensure that their personal and professional finances are
managed appropriately.
Information to RICS
8. Members shall submit in a timely manner such information, and in such form,
as the Regulatory Board may reasonably require.
Co-operation
9. Members shall co-operate fully with RICS staff and any person appointed by
the Regulatory Board.

Regulation

Parliament Square
London SW1P 3AD RICS is the world’s leading qualification when it comes to
United Kingdom professional standards in land, property and construction.
E pressoffice@rics.org standards and ethics, attaining RICS status is the recognised

(excluding Room 1804 60 East 42nd Street Suite 2, Level 16
United Kingdom) Hopewell Centre Suite 2918 1 Castlereagh Street
Rue Ducale 67 183 Queen’s Road East New York, NY 10165 Sydney
1000 Brussels Wanchai USA NSW 2000
Belgium Hong Kong Australia
T +32 2 733 10 19 T +852 2537 7117 T +1 212 847 7400 T +61 2 9216 2333
F +32 2 742 97 48 F +852 2537 2756 F +1 212 847 7401 F +61 2 9232 5591
ricseurope@rics.org ricsasia@rics.org ricsamericas@rics.org info@rics.org.au
United Kingdom Africa Middle East India

Parliament Square PO Box 3400 Office F07, Block 11 48 & 49 Centrum Plaza
London SW1P 3AD Witkoppen 2068 Dubai Knowledge Village Sector Road
United Kingdom South Africa Dubai Sector 53, Gurgaon – 122002
T +44 (0)870 333 1600 T +27 11 467 2857 T +971 4 375 3074 T +91 124 459 5400
F +44 (0)20 7334 3811 F +27 86 514 0655 F +971 4 427 2498 F +91 124 459 5402
contactrics@rics.org ricsafrica@rics.org ricsmiddleeast@rics.org ricsindia@rics.org
Appendix C:
Professional ethics guidance note: Part 1
introduction
Please turn overleaf for Appendix C.
Regulation
MAINTAINING PROFESSIONAL
AND ETHICAL STANDARDS
01 APRIL 2010
Regulation
It is our view that by applying the following set of standards, in their professional and personal
life, members and RICS regulated firms would meet the high standards of behaviour expected
of them, particularly under the following Bye-Laws and Rules:
Bye-Law 5.2.1:
“Every Member shall conduct himself in a manner befitting membership of RICS.”
Rule 3 of the Rules of Conduct for Members:

“Members shall at all times act with integrity and avoid conflicts of interest and avoid any actions
or situations that are inconsistent with their professional obligations.”
Rule 3 of the Rules of Conduct for Firms:

“A Firm shall at all times act with integrity and avoid conflicts of interest and avoid any actions or
situations that are inconsistent with its professional obligations.”
Core values
Act honourably
1 Never put your own gain above the welfare of your clients or others to whom you have a
professional responsibility. Always consider the wider interests of society in your
judgements.
Act with integrity

2 Be trustworthy in all that you do – never deliberately mislead, whether by withholding or
distorting information.
Be open and transparent in your dealings

3 Share the full facts with your clients, making things as plain and intelligible as possible.
Be accountable for all your actions

4 Take full responsibility for your actions and don’t blame others if things go wrong.
Know and act within your limitations

5 Be aware of the limits of your competence and don’t be tempted to work beyond these.
Never commit to more than you can deliver.
Be objective at all times

6 Give clear and appropriate advice. Never let sentiments or your own interests cloud your
judgement.
Always treat others with respect

7 Never discriminate against others.
1st April 2010 02

Regulation
Set a good example

8 Remember that both your public and private behaviour could affect your own, RICS’ and
other members’ reputations.
Have the courage to make a stand

9 Be prepared to act if you suspect a risk to safety or malpractice of any sort.
Comply with relevant laws and regulations

10 Avoid any action, illegal or litigious, that may bring the profession into disrepute.
Avoid conflicts of interest

11 Declare any potential conflicts of interest, personal or professional, to all relevant parties.
Respect confidentiality
12 Maintain the confidentiality of your clients’ affairs. Never divulge information to others unless
it is necessary.
Compliance with RICS schemes

Members and regulated firms must comply with any Rules of any RICS scheme which they
belong to. Examples of RICS schemes are:
● The Designated Professional Body scheme
● Domestic Energy Assessors
● Commercial Energy Assessors
● Home Inspectors
Individual members taking responsibility for their firm’s compliance

with the Rules of Conduct for Firms
If you are a principal of a regulated firm, your professional obligations under Rule 3 of the Rules
of Conduct for Members include a responsibility to ensure your firm complies with the Rules of
Conduct for Firms where it is reasonable for you to do so.
This means you could be held responsible as an individual for the behaviour of your firm. In the
event of potential disciplinary action, RICS Regulation will investigate each case and may decide
to bring action against an individual member, the firm, or both.
1st April 2010 03

Regulation
Where a firm ceases to trade or becomes unregulated

Where a member has been a principal of a regulated firm, and that firm either ceases to trade or
becomes unregulated by RICS, you must:
Complaints handling
1 Continue to adopt an effective procedure for handling complaints which were made to the
firm prior to it ceasing to trade/becoming unregulated by RICS.
Clients’ money
2 On ceasing to trade – ensure that the security of clients’ money is preserved until all
monies have been distributed. In the event of a firm becoming un-regulated by RICS –
inform your clients that the monies are no longer covered by the RICS Clients’ Money
Protection Scheme.
Professional indemnity insurance

3 Maintain run-off cover for a minimum period of six years. This ensures you are not exposed
to claims during the period following ceasing to trade or becoming unregulated by RICS.
It is advisable to contact your broker for more detailed advice
Further information
Contact us on 020 7695 1670 if have further questions or email regulation@rics.org.
Additional help sheets and other guidance material can be found at www.rics.org/regulation.
1st April 2010 04

rics.org
Regulation BETTER REGUL ATION. BETTER PROTECTION.

12 Great George Street
Parliament Square RICS is the world’s leading qualification when it comes to
London SW1P 3AD professional standards in land, property and construction.
United Kingdom
E pressoffice@rics.org
standards and ethics, attaining RICS status is the recognised

Room 1804 The Lincoln Building Suite 2, Level 16
United Kingdom
Hopewell Centre 60 East 42nd Street 1 Castlereagh Street
12 Great George Street
183 Queen’s Road East Suite 2918 Sydney
Parliament Square
Wanchai New York, NY 10165 NSW 2000
London SW1P 3AD
Hong Kong USA Australia
United Kingdom
T +44 (0)870 333 1600 T +852 2537 7117 T +1 212 847 7400 T +61 2 9216 2333
F +44 (0)20 7334 3811 F +852 2537 2756 F +1 212 847 7401 F +61 2 9232 5591
contactrics@rics.org ricsasia@rics.org ricsamericas@rics.org ricsoceania@rics.org
Rest of Europe Africa Middle East India

Rue Ducale 67 PO Box 3400 Office F07, Block 11 48 & 49 Centrum Plaza
1000 Brussels Witkoppen 2068 Dubai Knowledge Village Sector Road
Belgium South Africa Dubai Sector 53, Gurgaon – 122002
T +32 2 733 10 19 T +27 11 467 2857 T +971 4 375 3074 T +91 124 459 5400
F +32 2 742 97 48 F +27 86 514 0655 F +971 4 427 2498 F +91 124 459 5402
ricseurope@rics.org ricsafrica@rics.org ricsmiddleeast@rics.org ricsindia@rics.org
Appendix D:
Professional ethics guidance note: Part 2 case
studies
Please turn overleaf for Appendix D.
RICS Professional Regulation and Consumer Protection department
April 2003
Professional ethics guidance note:

Part 2 case studies
Suggested response to ethical issues and dilemma outlined in Part 10 of Guidance

Notes on Professional Ethics
Problem 1 Valuers’ associates

Problem 2 Dodgy work sheets!
Problem 3 Middle East contract
Problem 4 Terrible landlord!
Problem 5 Cheap and cheerful
Problem 6 Chateau Margaux
Problem 7 Save that tree!
Problem 8 You scratch my back, and I’ll scratch yours……..
General advice:
It is not easy to define “solutions” to problems like these. Sometimes several options
can be given. More than one solution may be appropriate in a given context. The
practitioner must follow his or her convictions and professional judgement. The acid
test, however, is whether the chosen option reflects the principles set out in the RICS
Guidance Notes on Professional Ethics, and complies with RICS Rules of Conduct.
These suggested responses offer avenues for thought only, and discussion.
Introduction
The following represents a discussion of the nature of the ethical issues, dilemmas,
factors and considerations comprised in the identified problem scenario. A standard
framework has been devised that treats similarly all the Examples of Ethical Issues
and Dilemmas in Section 10 (10.1.1 – 10.1.7), page 5 of the RICS Guidance Notes
on Professional Ethics. The framework employed for analysis of each scenario is as
follows:
A. Problem
B. History and creation of problems
C. Departure from good practice
D. Ethical dilemmas for resolution
E. Solutions that preserve business integrity and relationships
Problem 1 – Valuers’ Associates

A prospective site purchaser and developer (D) has identifield Valuers Associates
(VA), which is marketing a site for client/vendor (A), as a possible provider of
management service once the site is acquired. Naturally, VA would receive a fee
from the vendor for selling the site but has calculated that D’s fee for management
and sub-letting would be far in excess.
Scenario
Here, we are looking at a possible conflict of interest situation, and there is a risk to
business integrity, and commercial relationships.
History and creation of problems

The purchaser, D, seems to believe that VA would make an efficient manager of the
anticipated development, with marketing skills to encourage lessees and to act as an
effective agent for D, were he to become landlord. In this, D may have acted
innocently, seeing the arrangement as logical and economical in the appointing of
agents with good ability. However, has VA acted unwisely in allowing negotiations to
reach this point without warning D that it could not enter into simultaneous contracts
with both vendor and purchaser of the site?
Departure from good practice

Even if the contracts were not to be contemporaneous,1 knowledge by VA of the
possibility that it could enter, even at a later stage, into an agreement to manage and
engage in sub-letting on the part of the purchaser could induce it to influence the
offer price it recommended to the vendor. Moreover, the fact that agreement to act
as manager and agent for D for a larger fee than that paid to it by the vendor,
favourably disposes VBA towards D rather that A, in whose best interests VA should
act, through its Terms of Business and moral obligation. The thorough knowledge of
codes of conduct expected of a competent and honest practitioner should have led
VA to proceed very cautiously. The scenario, though, leads one to suppose VA has
realised it is poised on the edge of a precipice and has paused to consider its action.
Ethical dilemmas for resolution

For the avoidance of doubt “client” includes past and prospective clients, in this
context:
The foundation of the dilemma surrounding this problem is conflict of interest, which
has three aspects:
(i) Client/client conflict: the vendor (A) wishing to sell the site for the
highest price consistent with market rate, local land values, any special
value attaching to the site and aspirations for investment capital, and the
purchaser (D) with concern for the lowest reasonable offer the purchaser
will accept consistent with his own valuation of the site and plans for its
development (but see Rules 19 of Rules of Conduct. Solutions that
preserve business integrity and relationship, below).
(ii) Client/Member2 conflict: central to negotiation of price is Valuers
Associates’ primary duty to A in return for a fee but which now has an
expectation of a fee from the purchaser (and a higher fee, besides) that it
will gain by possibly acting against the interests of the client/vendor
(iii) Inter-client/Member conflict: in which a Member cannot act
impartially in the competing interests of two clients3
The situation in (i) above, as depicted here, is normal in business negotiations

and is often the subject of a ‘zero sum’ or distributive process in which there is
a negative correlation between the goal attainments of the parties4 so that, for
example, a proportion of gain for the vendor on selling price is an equal loss
for the purchaser and vice-versa. Ordinarily, it is not a conflict of interest
occasioned by the action of a professional but in this scenario there are
overtones suggesting that it would be.
1
i.e. if the contract for selling the site were to be completed before that for management and sub-
letting were struck up.
2
meaning a Member of RICS
3
op.cit.s.11.1.4
4
‘The Nature of Negotiation’, Joe and Sue Carpenter (1999) in Negotiation, Lewicki, Roy, J, Saunders,
David M and Minton, John, W, (1999), 3rd edition, (Boston: McGraw Hill)
In (ii) the Member has abrogated discretion towards his client and could, if
disclosing privileged information concerning A to D, be guilty of breach of
confidentiality.5
Solutions that preserve business integrity and relationships

Rule 19 of the Rues of Conduct (conflict between the interests of clients) states that
where a conflict arises or may arise between the interests of two or more clients of a
firm, a Member shall consider whether or not he or his firm is prepared to act or
continue to act for any or all of those clients and, if he decides to act or continue to
act, he shall:
(a) disclose to each client the possibility and nature of the conflict, the
circumstances surrounding it and any other relevant facts;
(b) advise them in writing to seek independent advice on the conflict, and
(c) inform each client in writing that neither he personally nor his firm can act
or continue to act for him unless thereafter either:
(i) the clients request him to do so unconditionally; or

(ii) subject to specified conditions that the Member has put in place
arrangements for handling the conflict which the clients have approved in
writing as acceptable to them.
Rule 18 of the Rules of Conduct (conflict between the member’s interest and a
client’s interest), states that where a conflict arises or may arise between a
Member’s interests or those of any associate of his and the interests of his client, a
Member shall consider whether or not he or his firm is prepared to act or continue to
act for that client and, if he decides to act or continue to act, he shall:
(a) disclose to the client at the earliest opportunity the possibility and
nature of the conflict, the circumstances surrounding it and any
other relevant facts;
(b) advise him in writing to seek independent advice on the conflict;
and
(c) inform the client in writing either that he and his firm are not
prepared to continue to act for the client in this capacity or that he
personally or his firm cannot act or continue to act for him unless
thereafter:
(i) the client requests him to do so unconditionally; or

(ii) subject to specified conditions that the Member has put in place
arrangements for handling the conflict which the client has approved in
writing as acceptable to him.
RICS Guidance to the Rules of Conduct

Whilst the Institution imposes this minimum standard of action by Members in respect
of conflicts of interest, there may well be circumstances in which professional
judgement dictates that it would be prudent to decline to act. Underpinning this
Rules is the principle that Members must not allow any personal interest (financial or
otherwise) to interfere, or be seen to interfere, with the exercise of their independent
professional judgement. If any conflict (actual or potential) arises it must be dealt
with in accordance with these Rules and if it is appropriate in all the circumstances to
act or continue to act, full and prompt disclosure must be made and evidenced in
5
op.cit.11.1.7
writing. Guidance on this subject is available in the Guidance to the Rules of
Conduct.
Members are reminded that there will be statutory provisions dealing with conflicts of
interest. For example, in the United Kingdom the requirements of the Estate Agents
Act 19796 and the Order and Regulations introduced thereunder may be applicable.
Thus the advice given by RICS Rules of Conduct is that a Member encountering
conflicts of interest (described in parts (ii) and (iii) in D. Ethical dilemmas for
resolution above), should urgently consider withdrawing from instructions or, if
uncertain whether this is appropriate, inform his client of the facts accordingly so that
s/he may seek independent advice. In application to this scenario, this indicates that
VA should cease to act for A or at least disclose the approaches of D to A so that the
vendor can decide whether he wishes to continue to retain VA to sell the site.
With regard to admission of fees and benefits, Rule 22 of the Rules of Conduct
dealing with Transparency of fees and benefits states that a Member shall disclose
to his client the nature and, where known, the basis or amount of any fee,
commission or other benefit (other than that agreed with his client) that he stands to
gain as a result of his appointment by the client.
Commentary
It is a fundamental principle of professional practice and of agency law that a
professional adviser or agent should not make a secret profit. Under agency law the
agent is under a fiduciary duty to account to his clients for any such profits. As a
general principle, Members are not prohibited from taking a financial interest in
matters upon which they are instructed (although there is a danger that such an
interest might interfere, or be seen to interfere, with the exercise of the Member’s
independent judgement).7 Indeed some clients may positively wish them to do so as
an expression of confidence. Nor are they prohibited from accepting trade discounts.
They are, however, required by their duty of good faith to disclose any such benefits
to the client.
When considering their terms of engagement, Members should consider whether

there are any benefits which they may obtain and notify the client accordingly.
In the situation depicted here, more than legitimate profit, commission or the benefits
of discount that accrue to a member are involved because fees for management and
sub-letting would be expected to continue (through contract) for an extended period
and that they should eventually exceed the fee for selling the site is not surprising.
It is important to know whether an ordinary person would consider the second came
into being only as a consequence of the first and whether there was an intention on
the part of VA to make a secret profit. VA would be well-advised to inform the
client/vendor of the circumstances as a matter of professional ethical behaviour.
If VA chooses to inform A of the approaches received by the purchaser for

management of the site, s/he can seek advice and is free to withdraw or continue
with the arrangement if all parties agree. This could only be done with the most
stringent of conditions and supervision.
6
1979, ch.38; in particular ss.15. – (1)-(6), Interests on clients’ money; 18.-(1)-(7), Information to
clients of prospective liabilities; and 21.-(1)-(6), Transactions in which an estate agent has a personal
interest.
7
Italics to emphasise the relevance of this advice to the scenario in question
Problem 2 – Dodgy work sheets!
Quantity Surveyors Partnership is engaged by a small client to assist with the
construction of an office extension.
The contractor appointed by a separate contract between the client and the
contractor is one with whom QSP have worked on numerous occasions and have an
associated development company for whom QSP have occasionally undertaken
consultancy.
Variations to the office project arise and the contractor submits day work sheets and
subcontract invoices which QSP (because of their involvement on other work) know
cannot be correct.
Scenario
In working on an office extension project with a known contractor, Quantity Surveyors
Partnership (QSP) is suspicious that, under the guise of project variations, the client
is being improperly charged for time and subcontractor invoices. However, QSP
enjoys an occasional working relationship with a development company associated
with the contractor. Friction between QSP and the contractor could redound upon
this relationship and business opportunities lost. QSP is thus in a bind.

Variations to contracts are not unusual. They normally occur when unforeseen
circumstances arise, even with the best of planning. It is the duty of QSP to deal with
the variations correctly so as to avoid slipshod contractual agreements and poor
contract management.

Principally a matter of good business practice rather than failed ethical procedures,
inattention to basic administration has resulted in a dichotomy for QSP in which the
possibly unethical behaviour of a business associate must be brought into question
at the risk of damaging another valuable relationship.

It is reasonable for any debtor to be able to question its creditor’s invoices and
indents for payment and to request proof for derivation of charge. However, if the
contractor is attempting to deceive, this information cannot be produced. The
dilemma for QSP is whether to cancel the present contract and risk harm to the
relationship with the development company, or authorise the payments with
insistence upon a more regularised system of contract cost estimation and contract in
future.8 9

QSP must weigh the benefits and losses of continuing in association with this
contractor. However, QSP is at liberty to avoid further dealing with the contractor it
suspects of improper practice, provided, for example, it could show valid reasons in
8
An option of reserving right to sanction if matters to not improve can be declared but would be in the
judgement of those dealing with the situation at first hand.
9
A difficulty with this option is that could be viewed as giving approval to irregular practice that is
counter to the general spirit of RICS codes of conduct. However, QSP is engaged unavoidably in
damage limitation and it must chart the best course through the hazards (see also Part F, General
Advice herein).
any future competitive tendering exercise for preferring a different organisation.10 The
development company should therefore have no occasion to sever relationships, as
the awarding of contracts to a different contractor for future work should be seen as
fair.
Problem 3 – Middle East contract

Professional Service Partnership (PSP) has an on-going assignment in the Middle
East. When the new partner-in-charge arrives on site, he finds that a number of his
key staff have personal connections with the government and contractors. It is
strongly suspected that such relationships involve the taking or giving of substantial
benefits without informing PSP head office. There is a major long-term contract
involving the host government and local contractors that was negotiated before his
arrival. The contract has been approved by head office and awaits his signature.
What should the partner do?
Scenario
We do not know whether the partner-in-charge was party to the contract negotiations,
but s/he certainly was unaware of personal connections between key staff of
Professional Services Partnership (PSP), the host government and contractors. In
view of the fact that commission of works by a government is likely to be large in
scope and with significant financial implications, PSP will be interested in maintaining
the good business relationships with the government that it has enjoyed through
previous assignments and to continue these into the future. However, the partner-in-
charge is faced with a fait accompli in being expected to sign the contract, possibly
under some psychological pressure because of his/her responsibility towards both
company and client, and, inevitably, will violate professional codes of conduct in so
doing, unless able to renegotiate ethically sound terms that would avoid vitiating the
entire commercial scheme.

Key staff in PSP appear to have engaged in corrupt practice of which the company
was unaware. On first examination, it is probable they have breached the terms of
their contract of employment by acting in their personal interests rather than those of
the company. We do not know if they received inducements from the client or
contractors to help secure the new assignment but, naturally, they would be under
such a suspicion until investigations are carried out.11 Further, unless the key staff
involved in the current contract negotiations are entirely different from those in
previous contracts, it is conceivable that other agreements connected with the on-
going assignment were similarly affected and that a history of corrupt practice may
be revealed.

PSP has a duty to ensure that its staff receives directions about probity in business
matters, to circulate a policy document among them and to make them aware of the
consequences of departing from its provisions. Those engaged in developing
relationships with external organisations and personalities or in positions of
responsibility for preparing contracts, discussing costs and terms, and indeed those
key members likely to work in close collaboration with clients, contractors or agents,
whether in preparation for a contract or its operation, are placed in special positions
of trust. A company should take steps to ensure it is comfortable over the integrity of
10
There is an unwritten moral justice that a company in this position of QSP should be allowed to
protect itself against malpractice provided, as in this instance it can do so without accusation.
11
The RICS Guidance Notes of Professional Ethics, s11.1.1
those employees.12 A company must also check the credentials of new staff to
ensure there is no history of irregular practice on their record or in the opinions of
referees.13 That there is evidence of irregularity in the present situation signifies that
PSP has not shown sufficient care in selection of staff or monitoring of procedures,
neither has it ensured that only sufficiently well-regarded staff are given authority to
deal with matters applied to the substance of their work.14 With senior and executive
staff, a system of disclosure of other connections and interests in the same or a
related sector of the industry is advisable, as those at the top of their careers and
influence frequently build legitimate associations with other organisations, or can
become shareholders.15 All such precautions would be normal in a well-regulated
organisation able to give assurance over ethical standards applied to its business,
clients and employees.16

The authority of the partner-in-charge to sign the contract appears not to be in
question but PSP is silent as to whether s/he has authority not to sign. S/he is now
in a bind because signature in possession of present knowledge would make the
partner complicit in gross irregularity; no truthful explanation offered for unwillingness
to sign could avoid disclosure of suspicious actions by key staff and the negligence of
the company to have regularised practice and procedures within its administration.
The new contract is therefore at risk with serious consequences for both agreements
already entered into and those entertained in future.

One course of action is immediate withdrawal from the assignment, instant dismissal
of the key staff concerned and, at the same time, elimination of future business
potential with the client. However a company wishing to prosper for the sake of its
directors, shareholders and employees could be said to have no other obligation than
to follow its registered objects of business; in fact there is a real, though sometimes
weakly-expressed, moral obligation on the part of the company to the welfare of
these groups. Business does not consist of challenges and decision-making
polarised into ‘rightness’ or ‘wrongness’. Just compromises can be reached with
great care while having regard for the law. In the RICS Guidance Notes on
Professional Ethics, it is recognised that Members may have to adjust behaviour in
response to particular situations while accepting responsibility for departing from the
rules of conduct and be prepared for consequences at law.17 In such a situation, a
Member should be prepared to give reasons for such departure and keep careful,
chronologically arranged records of actions taken.
If the partner-in-charge wishes to salvage the situation, the following might be

contemplated. A stay of 48 hours before signing the contract could be requested.
This may not be regarded by the client as unusual as often details require
verification, even at the last minute. Additionally, in certain cultures, it is often
regarded as discourteous to rush into business closure and there is first an elaborate
exchange of pleasantries. In this ‘breathing space’, a brief but urgent investigation of
the roles and actions of the suspect staff would be undertaken both at the host
location and, via telephones, Telex, Internet or other means, at the company
headquarters.
12
ibid.s.8.1.3
13
ibid.s.8.1.3
14
ibid.s.8.1.4
15
ibid.s.11.1.4
16
ibid.s.2.5
17
Introduction to Guidance Notes on Professional Ethics
It should also be remembered that it is a normal part of culture in some societies to
use personal contacts in order to secure favourable agreements; in fact, it is believed
this guarantees reliability. In such a sense, the key staff may not have committed an
offence in the eyes of the client, though excusing them in the view of the company
would be more difficult. PSP would then be able to take the option of replacing staff
key to the operations of the contract with trusted others,18 leaving disciplinary action
over the original staff at its disposal in a separate arena. The client may or may not
object to the change but transparency in the relationship, though risking client
dissatisfaction, would be ethically appropriate for a company operating within the
RICS codes of conduct.19 Whether this were to jeopardise business relationship with
the client in the future would be subordinated to the need to comply with codes of
conduct. Care would need to be exercised in explaining that the culture in which
PSP operates does not permit collusion over business in such fashion and
understanding left to the degree of internationalism adopted by the host country.
Assuming it is considered appropriate to explain your actions to the client, again this
is a matter of judgement.
A final but no less important consideration would be that of the law. It should be
quickly established whether the key staff have breached their contracts of
employment so as to be summarily dismissed,20 the company having regard for the
consequences of an appeal against this action; whether irregularities in the staff’s
dealing with clients and contractors contravene public law in the country where the
company is registered and the host country; whether the company can sue privately
if the staff have received pecuniary advantage against the interests of the company.
The law applying in the country where the contract is signed is significant. It is
possible in some circumstances to declare the law applying to the contract to be the
law of the supplying party’s country, though the client’s legal experts may insist it is
the law of the host country. Further, certain contract terms may be illegal in a host
country (for example arbitration clauses, so that difficulties would arise in any future
dispute over the operation of the contract). Therefore, legal advice should be sought
as to whether the actions of the key staff constitute an offence in the host country if
that is where they were considered to have been committed.
Problem 4 – Terrible landlord!

CS Consulting operate a number of managed houses in multiple occupation as agent
for a major client. The local authority have indicated that, under statutory powers,
they wish to see conditions in these properties improved, particularly with respect to
fire precautions. The landlord instructs CSC to use delaying tactics to defer the
implementation of the improvements. What should the consultants do?
Scenario
CS Consulting (CSC) is being asked by its client to forestall local authority
instructions, that have the force to statute, to improve aspects of health and safety
provisions in houses that it manages as agent. By inference, this could include
clouding the issues in response to local authority enquiry and general economy with
the truth over implementation of safety measures. The client therefore risks
prosecution and CSC may not evade an action simply because it was acting under
18
possibly the partners or directors assuming direct control
19
ibid.s.2.5: “The definition of Professional Ethics endorsed by the (RICS) Working Party is: ‘giving
of one’s best to ensure that clients’ interests are properly cared for, but in doing so the wider public
interest is also recognised and respected.’”
20
i.e. without a disciplinary procedure being followed in the form of verbal and written warnings as
laid down by association rules or, in their absence, statute.
instructions from the agent, since a company belonging to a professional
organisation has a duty to inform itself as to law and regulation.21 22

If the local authority has recommended improvement of fire safety precautions to the
properties, does this signify previous neglect and CSC’s role as agent in not drawing
such matters to the attention of the client/landlord? Regulations and quality
standards are introduced constantly and, sometimes, it is difficult for landlords to
keep up. It is of course, the duty of the agent to be aware, and advise accordingly.
Nonetheless, the scenario suggests the landlord’s aversion to any expense that he
can shun, even when provisions are mandatorily imposes. CSC may not have been
sufficiently robust in emphasising to the client the ethical rules by which it operates in
its professional capacity.

Failure to advise clients about health and safety directions so as to avert statutory
compulsion, violates RICS ethical Rules of Conduct23 is generally unprofessional in
an agent and could lead to a claim for negligence. The client/landlord must not be
allowed to feel in any way that the agent is a ‘soft touch’ over regulations and CSC
should assist the client to understand the need to maintain safety standards.

CSC faces a conflict in that the client’s instructions are at odds with legal
requirements and is being asked to operate outside the law. Harm to the business
relationship might well result from CSC’s refusal to comply with its client’s wishes.
Withdrawal from the management contract would have the consequence of financial
loss for its unexhausted period. It is improbable the client would sue for breach
under the circumstances, but not impossible.

CSC should inform the client/landlord that it will engage in illegal activity over the
compulsion orders concerning fire safety in the properties it manages. If the client
will not undertake to comply with the local authority direction, CSC will have no
alternative but to sever the management contract, regardless of consequences.
Better by far would be successful persuasion of the client by CSC that the
ramifications of delaying implementation of the compulsion orders are extremely
serious for both client and property manager, with severe penalties to be expected
from prosecution. In terms of economic risk and general prudence it would be
constructive to point out that the costs of improving fire safety might well be less than
legal sanction and associated court costs.
Problem 5 – Cheap and Cheerful

Cheap and Cheerful plc: “We cut corners to provide services at low fees. We
consider winning commissions more important than the quality of service provided”.
Would you instruct this firm?
Scenario
Cheap and Cheerful plc offers itself as a ‘bargain basement’ service that appears to
relegate standards to the bottom division of the professional league for the sake of
volume and rapid turnover of business.
21
The RICS Guidance Notes on Professional Ethics , s.6.1.2; 6.1.3
22
See also ibid.s.3.2 concerning self-regulation of RICS
23
ibid.s.11.1.2
This company is trying to undercut the market for surveyors, albeit with an
unmeritorious advertising slogan. There are precedents in the consumer and
professional market for ‘no frills’ services (though without advancement of low
professional standards as if a virtue). Partly this has been as a reaction to self-
protectionism and monopoly among professions apparent in the past that is now
largely broken.
This de-regulation has also relaxed rules on advertising for many professionals
including chartered surveyors. There may in fact be a debate on whether the
supposed high standards of traditional services ever were real or more a matter of
self-perpetuated mystique and whether they were altogether necessary for the
consumer/client.
However, the issue is whether a “cheap and cheerful” professional service must not
fall below minimum standard, however “basic” there core service might appear.

The foregoing raises questions of the importance of standards for the sake of trust
and accountability in business and of reassuring the public and industry about
professionalism in practice. Cheap and Cheerful seems to hold professionalism in
low regard. Does this company have an organisation wide ethics management, audit
and improvement system?24 Is there a partner or director responsible for ethical
compliance?25 Does it have a complaints procedure in accordance with RICS
Regulations that can also evaluate and manage complaints on unethical practices?26
Has it developed and published a code or statement of ethical conduct?27
Cheap and Cheerful plc slogan appears disreputable. Does it have concern for
health and safety matters in its business operation?28 Are its financial records in
good order?29 Does it engage in fair competition?30 Has it regard for environmental
protection?31 Does it respect the local community and consider the impression it
creates among the public and fellow professionals?32
RICS has, in many areas, laid down minimum standards of service and behaviour:
most particularly in Practice Statements and compliance with these is mandatory.

RICS regulations lay down requirements on advertising, including details on the
content and accuracy of attestations in literature and graphic display.33
A distinction can be drawn between conduct and competence. Users seriously

contemplating business with Cheap and Cheerful plc should appreciate that, there
may be issues of competence as well as conduct, here, although the advertisement
does not expressly say one would not receive services of training and qualified staff.
24
ibid.s.7.1.1
25
ibid.s.7.1.2
26
ibid.s.7.1.3
27
ibid.s.7.1.4
28
ibid.s.11.1.2
29
ibid.s.1.1.8
30
ibid.s.11.1.9
31
ibid.s.11.1.15
32
ibid.s.11.1.16
33
ibid.s.11.1.14
A potential client would have to consider whether awarding a commission to this
company would be fraught with uncertainty, balancing risk of irredeemable bad
practice or incompetence with economic or other imperatives for rapid results, or
possibly some other (dubious) agenda in which the client accord standards low
priority.
At one’s most generous, liberal and forgiving, it could be thought just conceivable
that Cheap and Cheerful plc made a brash attempt to oversell itself and the bizarre
claim to unprofessionality was part of a strategy to attract attention.34

Preservation, or even introduction, of business integrity with Cheap and Cheerful plc
looks to be beyond the realm of possibility and a relationship with the company, as
represented, would involved palpable dangers to any responsible client. There would
be no risk in bypassing this company when seeking professional practitioners to
provide the services of a surveyor.
Problem 6 – Chateau Margaux

SD Consulting have just completed a large, complex project for a client. Alternative
suppliers were considered, and one selected which SDC has not used before.
Contracts were negotiated and the project completed over a twelve month period.
The final handover was celebrated with the supplier hosting a lavish dinner attended
by the consulting team and key client management. The team leader complimented
the host on the wonderful Chateau Margaux 1982. The next day a case of the wine
was delivered to her home. What should the consultant do?
Scenario
SD Consulting has just completed a large value contract for a client using a supplier
with which it has had no previous relationship that has celebrated completion by
hosting a dinner party for the consulting team and key client management. In
addition, the supplier subsequently has sent a gift of wine to the consulting team
leader based on her complimentary remark at dinner about its excellence. The team
leader is at liberty to accept the gift but knows (we are to suppose) that to do so
would violate her professional codes of conduct35 and therefore faces an ethical
dilemma. She must balance the risk of returning the wine against that of offending
the supplier and vitiating the opportunity for further business relationships.36 She
may question the motives behind making the gift. Further, she may suspect her
chance remark was interpreted as a request which, if fulfilled, would favourably
dispose her towards the awarding of future contracts to the supplier.

This scenario leads us to suppose the contract was awarded as a result of
competitive tender or similar process as appropriate to national or EC rules
concerning scale of contract cost. In this there is no suspicion of irregularity.
Extension and acceptance of a dinner invitation are innocent acts, but could they be
interpreted here as inducement on the part of the host to obtain further commissions?
34
This is so-called ‘negative advertising’ in which a product or service is deliberately disparaged by the
promoter to create an innovative approach reckoned actually to attract buyers because they are
incredulous at the damaging statements.
35
The RICS Guidance Notes of Professional Ethics, s.11.1.1
36
We do not know if SD Consulting has been satisfied with the operation of the contract and, therefore,
whether a future relationship is contemplated. The company has not used these suppliers before.
We do not know if SD Consulting expressed any terms for acceptance and
participation in the celebration.

Invitations to competitive tender can include statements of ethical terms of business
and the expected conduct of relationships during the contract term. This will be an
important consideration in global business deals. Certainly, in the contract
negotiations, SD Consulting should have taken the opportunity to outline best
practice and involve those responsible in the company for issue of policy, ethical
compliance and audit of procedure in meetings at the earliest stage.37 Further, SD
Consulting may have neglected to provide training in ethical management of contract
negotiations that would have equipped personnel in this instance either to resist the
advances of the supplier or to make terms for acceptance of them clear,38 or included
monitoring and audit in its staff performance and personal appraisal systems.39 It
can inform staff of corporate standards in business dealing through internal
publication of codes of conduct.40

An unconditional acceptance of the wine may be seen to compromise the team
leader and can make her appear beholder or ‘bought off’ with respect to future
business with the supplier. Ideas of unfairly influencing her future decisional
behaviour could have been contemplated.41 Perceptions are important, here.

Accepting hospitality from business associates does not necessarily violate RICS
codes of conduct provided the terms of acceptance are expressed, namely that it
cannot be taken into account in the awarding of future contracts, nor would be
regarded in any sense as extra payment for favour. To avoid the offence that such a
statement could cause, it would be preferable to state that the gesture would be
reciprocated at another time, perhaps at Christmas or another public, sporting or
musical event, when hospitality is extended to multiple associates and therefore is
unpreferential.42 The team leader should be cautioned about making chance
complimentary remarks that can be misinterpreted, albeit with innocent and honest
intent, though it is impossible to guard against this eventuality totally at social
occasions. However, better understanding of the ethical basis of the relationship
between the two companies might have prevented the error of judgement by the
supplier.
A compromise acceptance of the gift could be effected by donating the wine to SD

Consulting’s office hospitality or staff benefit stores. However, might the supplier still
believe the act of giving the gift had secured some ulterior purpose? An additional
difficulty is the value of the gift, and its delivery to the team leader’s home, rather
than openly to the office.
Problem 7 – Save that tree!

A client instructs her professional advisers to take every available measure to help
prevent a proposed housing development on playing fields overlooked by her house.
37
ibid.ss.7.1.2; 7.1.5 and s.7 generally.
38
ibid.s.8.1.4;
39
ibid.ss.8.1.2;
40
ibid.s.7.1.5
41
A parallel situation could exist if the gender of giver and recipient of the gift were reversed, with
subtle variations of role and intent.
42
ibid.s.11.1.1
One of the key factors in enabling the development to proceed, is the removal of a
mature oak tree at the site entrance in order to improve junction visibility. Within the
practice, there is a young Chartered Surveyor who has very strong views on
protecting the environment. He has been working with the client on this commission
and suggests that he should invite some of his friends from the local airport extension
campaign to come and occupy the tree and should use the opportunity to gain
publicity for the firm and the services which you are able to provide. What would be
your instructions?
Scenario
This is a familiar situation in the conflict between construction and conservation in
today’s rural society. Here, an idealistic Chartered Surveyor is assisting his
company’s client to resist a building development but has engaged in forms of public
protest leading, possibly, to civil disobedience that do not arise from his professional
duties towards either client or practice. Moreover, he has presumed that any
publicity gained from this action can be used to promote the practice and its services.

The distinction between professional duty and freedom to act according to
conscience or private conviction is a matter for the practice partners or directors to
draw with the employee.

Does the Chartered Surveyor concerned misunderstand his role as a chartered
surveyor, if we can imagine his proposed actions are in any way consistent with
professional behaviour? There is an ongoing obligation on the practice to ensure
behaviour continues to comply with codes of conduct through monitoring and audit or
procedures, performance review and personal appraisal. A clear indication should
have been given of the overarching imperative to comply with ethical rules when the
member of staff was newly appointed,43 at which juncture the opportunity either for
the employee to declare personal interests that might clash with the business of the
practice, or for the practice to make its own enquiry on the matter, could have been
taken.
Moreover, professionals who do not work within the parameters of the law may be
subject to criticism and even discipline by their employers and professional bodies.
The Chartered Surveyor concerned has (or will have) offended against the code of
conduct regarding political and social behaviour.44 Using the occasion to advertise or
promote the practice does not directly contravene RICS code of practice rules in their
present form of expression but is likely to bring the practice and the profession into
disrepute for manifest opportunism and is against the general spirit of ethical
behaviour for which the rules provide. However, specific constraints on advertising
demand that it should be fair and not misleading45 and it could be said that
association of the practice with public protest takes unfair advantage of media
exposure against those surveyors who do not use such means and, further, it
misleads in that it is no part of the legitimate service of the practice or profession to
engage in public demonstration for or on behalf of itself or its clients.
43
ibid.s.8.1.3
44
ibid.s.11.1.17
45
ibid.s.11.1.14
The issue here is simple in that the surveyor concerned has confused his personal
convictions with professional responsibility and is risking the reputation of the
practice. It is assumed the practice does not wish to enlist in the public protest and
prefers to dissociate itself with the actions of its surveyor in creating and escalating
the demonstration. The client’s views may be significant in that she could feel the
public protest will fuel her argument and it would be an important matter for
determination whether she approves of, or even encourages, the action. Loss of
business caused by withdrawing from instructions if the practice disapproves of its
client’s methods must be measured against the loss of reputation to the profession if
it were seen encouraging unprincipled actions.

The young Chartered Surveyor must be given an opening in which to relinquish his
activist role and revert to entirely professional practice, having been given an
explanation of his errors, their effects and likely breach of ethical rules. In the event
of his failure to agree, the practice must decide whether removing him to another
commission is sufficient to curtain his unprofessional activity, or whether disciplinary
procedure should be applied, with the eventual prospect of dismissal.
Problem 8 – You scratch my back, and I’ll scratch yours…..

You have quoted a fee of £5,000 for a survey of a commercial property. The
potential client advises you that a competitor had quoted £4,500, and suggests the
job is yours, if you match that quote.
Scenario
A potential client is engaging in a ‘Dutch auction’ in attempting to persuade you to
lower your fee to match that of a competitor so as to gain a commission.

How was your original fee of £5,000 reached? In reducing your quote, to match your
competitors, is there a danger that you will not be able satisfactorily to carry out the
survey? What if the competitor then lowers his quote to £4,000. Where will this end?

To submit to ‘Dutch auction’ pressures or attempting to win favour by compromising
on fees could violate RICS rules of ethical conduct governing fair competition46 and
could, even remotely suggest amenability to bribes.47

You will be tempted to win a commission by adjusting your fee to oust a competitor
and gain preference, especially if business is poor. For the modest sum mentioned
in this problem the survey is likely to be small in scope and would not take long.
Could you recognise that, having cut costs, this may affect the “rules” for future
commissions with this client? What will prevent your gain on this occasion turning
into loss on another?

Are you satisfied as to the basis of your original quotation? Quoting fees that do not
properly reflect a professional person’s use of time, and expertise as required, may
not be of long-term benefit to your practice, either professionally or commercially.
However, the RICS, in response to OFT requirements, no longer promotes “scale
fees”. This suggests a degree of competition, is desirable, but it must be tempered
46
ibid.s.11.1.9
47
ibid.s.11.1.1
by professional considerations. Of course, it would be desirable if the potential client
selects a surveyor according to fairness and not manipulation. The fee stated in any
estimate ideally should reflect a surveyor’s costs and if the potential client honestly
prefers the services you offer, your full fee should be accepted and the
commission granted on that basis. Perhaps the potential client would be impressed
by such attestation and surmise that s/he would find it among all surveyors through a
uniform code of behaviour!
Note applicable to all problems:
General advice:
“Solutions” to problems based on ethical principles of ethical behaviour cannot be

definitively expressed. Sometimes several options can be given. More than one
solution may be appropriate in a given context. The practitioner must follow his or
her convictions, and professional judgement. The acid test, however, is whether the
chosen option reflects the principles set out in the RICS Guidance Notes on
Professional Ethics, and complies with RICS Rules of Conduct. These are the
standards against which the Member will be judged if his or her decision is
challenged.

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© The College of Estate Management 2011

3. Ethics and the law

8. Ethics and the internationalisation of property-based professions

References and Bibliography

Appendix A: RICS: Rules of Conduct for Firms 2007 – Version 5

Appendix B: RICS: Rules of Conduct for Members 2007 – Version 4

Appendix C: Professional ethics guidance note: Part 1 introduction

Appendix D: Professional ethics guidance note: Part 2 case studies

 Comment on the effect of culture on ethical principles, and apply this to a

 Explain what is meant by an ethical dilemma, and comment on the use of

 Discuss the issues underlying professional codes of conduct as applied to the

Ethics is a branch of philosophy concerned essentially with theories of ‘goodness’

Modern philosophers tend to argue that ethics is essentially a product of our

A modern definition of ethical values might therefore be:

‘Ethics is a complicated matter. It is partly a matter of general principles or even

3 Ethics and the law

A variety of theoretical approaches have been proposed as to the guiding principles to

 self-interest (e.g. the ethical egoism theory proposed by M G Singer, 1961);

In addition to these basic theoretical approaches, a number of authors have also

1. avoid harming others;

Some more complex approaches are outlined below.

4.1 American Accounting Association Model (William May, 1990)

4.2 Laura Nash 12-question Model (Nash, 1981)

11. What is the symbolic potential of your action if understood and if

1. Caring – treating people as ends in themselves, not as means to ends.

Rule 1 Consider the well-being of others, including non-participants. This rule

Rule 2 Think as a member of the community, not as an isolated individual. This

4.4 Case study

CASE: Jim: offering advantages

The NORM theory

Step 3 If necessary, revise the proposed rule.

Omnipartiality requires us to consider the issue from the standpoint of each

Test the case using NORM theory

 Proposed Moral Rule 1

 Proposed Moral Rule 2

His employer would be in a dilemma, as Jim once was; but Jim is in a

 Proposed Moral Rule 3

Jim’s colleagues would be happier, and those priding themselves on their

On balance, on the outcome of this analysis, this rule would be supported by

Irrespective of whether one takes an absolutist or a culturally relative view, it is now

‘A profession involves a particular kind of relationship with clients or patients

Appendices C and D, although superseded, provide some useful examples of ethical

8 Ethics and the internationalisation of property-

This internationalisation of the construction professions involves practitioners coming

Check your assessment against the analysis set out in Appendix D.

REFERENCES AND BIBLIOGRAPHY

Chatov R (1980) ‘What Corporate Ethics Statements Say’, California Management

Clutterbuck D (1992) The Role of the Chief Executive in Maintaining an Ethical

Cressey D and Moore C A (1983) ‘Managerial Values and Corporate Codes of

Ford R C and Richardson W D (1994) ‘Ethical Decision-Making: a Review of the

Goodpaster K E (1984) Ethics in Management, MA: Harvard Business School.

Hong Kong Ethics Development Centre (undated) Ethics for professionals

Langlois C C and Schlegelmilch B B (1990) ‘Do Corporate Codes of Ethics Reflect

Leisinger K M (1995) ‘Corporate Ethics and International Business: Some Basic

Mitchell A, Puxty T, Sikka P and Willmott H (1994) ‘Ethical Statements as

Pitt H L and Groskaufmanis K A (1990) ‘Minimizing Corporate Civil and Criminal

RICS (2000) Guidance Notes on Professional Ethics, Professional Ethics Working

Sanderson R and Warner I (1984) ‘What’s Wrong With Corporate Codes of

Singhapakdi A and Vitell S J (1990) ‘Marketing Ethics: Factors Influencing

Smith A J (1995) ‘Professional ethics in quantity surveying’, discussion paper