Best Practices | Custom Buildings | Design and Engineering | Blast Resistant Buildings
Avoiding Conflicts of Interest with Blast-Resistant Buildings
In any team project, it is essential that all members provide unbiased recommendations for the product or solution being developed. This is particularly important in situations where safety is at risk, such as in the oil and gas industry. It is imperative that the team responsible for creating the specifications to protect people from potential hazards remain neutral and unbiased. It is important that they remain separate from the manufacturing and selling process. This ethical separation is critical in ensuring that greed does not influence the solution developed.
The concept of unbiased recommendations isn’t new. We see examples of it in many different fields, like medicine or law, where professionals are expected to provide unbiased recommendations to their clients. However, the importance of unbiased recommendations is often overlooked in business and engineering projects, where the potential for conflicts of interest is high. Here are just a few examples of conflicts of interest:
- A doctor who prescribes a medication that they profit from: Imagine that you are a patient suffering from a serious illness, and your doctor prescribes a medication that they sell in the lobby. Can you trust that the medication they’ve prescribed is the best or only treatment for your condition? Or, are they only trying to get you to buy the medication because it is lucrative for them?
The American Medical Association has established guidelines on financial relationships between physicians and industry to avoid these types of conflict. They recommend that doctors disclose having financial ties to products they prescribe. (They also aren't allowed to accept gifts or payments that could influence their decisions.)
- A realtor representing both the buyer and seller in a real estate transaction: It is the duty of the realtor to protect the interests of their clients, but the interests of the buyer and seller may not always align. The realtor's duty to negotiate on behalf of each client conflicts since they cannot simultaneously get the best deal for the buyer and the most money for the seller. Similarly, the realtor's duty to disclose material information to each client may conflict, as they cannot disclose confidential information to one client that would harm the other client's interests.
In real estate transactions, many states have laws that require realtors to disclose if they represent both sides, and they must obtain written consent from both parties. This ensures that both buyer and seller are aware of the potential conflict of interest and can make informed decisions.
- A financial advisor who recommends investments based on their commission: Financial advisors are expected to provide unbiased recommendations to their clients. However, if a financial advisor recommends investments based on the commission they receive, their recommendations may not be in the best interest of their clients. The advisor may also be incentivized to recommend investments that benefit their own firm, rather than the best interests of their clients.
The Securities and Exchange Commission (SEC) has established rules under the Investment Advisers Act of 1940 that require financial advisors to act as fiduciaries and put their client's interests above their own. They must disclose any conflicts of interest and obtain client consent before making any recommendations that may benefit them.
- A government official with financial interests in a company that they are responsible for regulating: This can create a conflict of interest because the official may make decisions that benefit their own financial interests, rather than the best interests of the public. For example, they may be less likely to enforce environmental regulations that would negatively impact their company, or they may be more likely to grant permits or favorable treatment to their own company. This compromises the integrity of the regulatory process and erodes public trust in government institutions.
Government officials are subject to conflict of interest laws and regulations, such as the Code of Federal Regulations (CFR) and the Ethics in Government Act. These laws require government officials to disclose their financial interests and recuse themselves from any decision-making that may benefit them personally.
The same kind of conflicts of interest can easily be present with engineering for blast-resistant building projects. If the team responsible for creating the specifications to protect people from potential hazards also profits from constructing and selling the building, they could easily experience bias during the process. They could find themselves pressured to meet certain deadlines, budget restrictions, or goals, in order to produce more. Or, they may find themselves using specifications that make their solution appear to be the only viable option, in order to get sales.
Even when the engineering is handled by one team, construction by another team, and sales are still a third team, they are all part of the larger organization. Each of them benefits when the company is profitable and the health of the organization itself depends on each of them. The potential for conflicts of interest is high. For this reason, RedGuard depends on third-party engineering for both testing the safety of their buildings and also for engineering services like Quantitative Risk Assessments, Facility Siting Studies, and Structural Consulting Services.
Business transactions should always have a certain level of transparency in order to avoid conflicts. In the sales and marketing process, there are a few recommended practices to achieve this transparency.
The book "They Ask, You Answer" by Marcus Sheridan emphasizes the importance of transparency and honesty in communication, particularly in the sales and marketing process. However, these principles can be applied to any team project:
- Identify potential conflicts of interest. Before starting a project, identify who will be responsible for creating the specifications and who will be responsible for manufacturing and selling the building. Since there is a conflict of interest, the team responsible for creating the safety specifications is separate from the team responsible for constructing and selling the building. What does this look like in practice? When it comes to selling blast-resistant buildings, it would mean that a company performing a facility siting study to determine what solutions are required on a hazardous work site is a different company than the one that manufactures and sells you the solution that will keep your team safe.
- Be transparent about the decision-making process. It is essential to be clear about who is responsible for making decisions and how those decisions will be made. Transparency helps to ensure that everyone involved in the project understands the process and can provide input where necessary.
- Prioritize safety and quality over profits. In any team project, decisions about safety and quality should be made based on what is best for the people who will use the building, rather than what is most profitable for the team. By prioritizing safety and quality, the team can ensure that the final product meets the highest standards.
- Encourage open communication. All team members should feel comfortable expressing their opinions and concerns, and there should be a process in place for addressing any issues that arise. By encouraging open communication, the team can ensure that all recommendations are based on what is best for the project, rather than personal interests.
- Document the decision-making process. It is essential to document who made the decisions and why. By documenting the decision-making process, the team can ensure that all decisions are made based on sound reasoning and that there is a record of how the final product was developed.
These principles are particularly important in situations where safety is at risk, such as in the oil and gas industry. By following these practices, the team can ensure that the final product meets the highest standards and is developed with safety as the top priority.
Phillip Lange is the technical sales manager at RedGuard. With his experience working with companies in the oil and energy industry, his specialties include process scheduling, negotiation, budgeting, value engineering, and operations management. He oversees technical engineering services that are offered at RedGuard, like facility siting studies, building retrofits and custom blast-resistant solutions.