The need for technical auditing in the Zambian construction Industry

Abstract

The scale of corruption is magnified by the size and scope of the construction sector, estimated globally at US$3,200 billion per year (Transparency International, 2005). As economic crimes such as fraud, bid-rigging, bribery, collusion, coercion and extortion have grown worldwide, so has the fight against them taken centre stage. The construction industry being a multi-billion dollar complex industry makes it a suitable breeding ground for these economic crimes that have remained an impediment to development. To uphold the high ethical standards required in the industry, stakeholders need to introduce and facilitate proactive strategies for the prevention of economic crimes. One such strategy is the introduction of regulatory technical auditing on construction projects. Technical auditing is currently not contractually recognized in any form of contract used in the Zambian construction industry. The aim of the research was to develop a technical audit model to be used in the auditing of construction projects in Zambia to lower construction costs and tackle unethical practices in the industry. The objectives of the study were to investigate the nature and form of economic crimes in the Zambian construction industry and establish whether existing institutions had the capacity to expose and prevent such criminal activities. The study further examined the benefits of technical auditing, and whether technical audits were the answer to reducing economic crimes in Zambia's construction industry. The research also investigated whether whistle blowing systems, contractor blacklisting and deregistration of consultants from their professional bodies were adequate deterrents of corrupt practices. To investigate the unethical practices in the construction industry cited in literature, the data collection techniques included literature review, structured interviews, questionnaire surveys and case studies. A best practice technical audit model was developed and validated by industry stakeholders.

The study established that introduction of pro-active technical auditing, through the appointment of technical auditors and incorporation of audits at planning stages of projects, would be an effective measure in uncovering and preventing or minimizing unethical practices in construction. It was further established that the highest ranked benefit of technical auditing was client confidence. Increased client confidence would ensure more investment, ultimately increasing the country's economic activity in the sector. It is expected that information brought out in this study may be useful in raising awareness of economic crimes, development of prevention strategies and assist in developing necessary policies and guidelines for the introduction of regulatory technical auditing of construction projects in Zambia, and elsewhere. The study, though, had some limitations that need to be considered when interpreting the reported results. Limitations such as the scarcity of literature on technical auditing in Zambia, the large geographical coverage of Zambia, which was the study area, nonresponse from the supplier sector and the absence of an internationally accepted definition of economic crime could be cited as weakness in the study. Varying interpretations by respondents could probably have had an influence on the results reported in the paper. However, some of the identified limitations could be addressed through further studies.