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Surveying Ethics and Conflicts of Interest

Discussion in 'Surveying & Geomatics' started by Kent McMillan, Apr 20, 2017.

  1. Kent McMillan

    Kent McMillan Banned

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    The Standards of Professional Responsibility and Rules of Conduct of the Texas Board of Professional Land Surveying provide the following rule regarding Conflicts of Interests:

    RULE §663.4

    The acceptance of employment, or engagement to perform services, requires the faithful performance of services, and the avoidance of any conflict of interests. All dealings with a client, employer, or the public, and all matters related thereto including the land survey product(s) shall be kept in the closest confidence. Should an unavoidable conflict of interest arise, the client, employer, or the public shall be immediately informed of any and all circumstances, which may hamper or impair the quality of the services to be rendered. The registrant:

    (1) Shall not agree to perform services for a client, employer, or the public if there exists any significant financial or other interest that may be in conflict with the obligation to render a faithful discharge of such services, except with the full knowledge, approval, and consent of the client or employer and all other parties involved;

    (2) Shall not continue to render such services without informing the client or employer, and all other parties involved, of any and all circumstances involved which may in any way affect the performance of such services, and then only with the full approval of the client or employer;

    (3) Shall not perform, nor continue to perform services for a client, employer, or the public if the existence of conflict of interest would impair independent judgment in rendering such services;

    (4) Shall withdraw from employment at any time during such employment or engagement when it becomes apparent that it is not possible to faithfully discharge the duty and performance of services owed the client, employer, or the public;

    (5) Shall not accept remuneration from any party other than his/her client or employer for a particular project nor have any other direct or indirect financial interest in other services or phase of service to be provided for such project, unless the client or employer has full knowledge and so approves; and


    (6) Shall keep inviolate the confidences of his/her client or employer, except as otherwise required in the rules of conduct.

    In what way would the above rules not tend to operate to discourage an ethical practitioner from taking on a project for a fixed fee if there is any chance at all that the fee would not be adequate to cover the the full extent of the work that may ultimately be required to perform the work properly?
     
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  2. Glenn Breysacher

    Glenn Breysacher 7-Year Member

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    Good question Kent. At the moment, I don't see how, taken literally, it wouldn't tend to discourage ethical practioners. I suppose that one might argue that if read in light of existing cirumstances and reading those items in the context of the entire section, you couldn't reasonably conclude that. However, I read it as you do, literally.
     
  3. Duane Frymire

    Duane Frymire 7-Year Member

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    Wouldn't we have to determine an hourly rate, below which the surveyor might feel like they're not being compensated properly? Is a licensed professional allowed an exemption to pay themselves less than minimum wage, or to lose money on a project rather than make a profit? And what about the underpaid technicians doing much of the work only because they will be rewarded with a reference when the indentured servitude is over? I agree pricing is probably the largest single problem for surveyors. The lack of a consistent pricing method across the profession results in just about every complaint ever levered against it.
     
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  4. Kent McMillan

    Kent McMillan Banned

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    Well, you'd start with estimates of reasonable expectation of annual income for a surveyor and all of his assistants/employees, the overhead expenses of the organization, and other factors such as reasonable return on investments. Presumably, all licensed professional surveyors aspire to either become or remain members of some substratum of the middle class, so that would give a ballpark estimate of annual income ranges. I'd start with the incomes of licensed Master Plumbers and head upwards. The federal minimum wage or the prevailing wage at Walmart obviously wouldn't be the floor.

    You'd take into account cyclical effects, i.e. the variability of business conditions and end up with a range of hourly charge-out rates for different activities, below which a surveyor could only be reasonably be expected to make significantly less money than expected, which most professionals would understand as a loss.
     
  5. Kent McMillan

    Kent McMillan Banned

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    As I read the rules, a surveyor would need to notify his or her client the moment that it became evident that the fixed fee would be inadequate to pay for the full scope of services that the project would actually require to meet even minimum standards.
     
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  6. roger_LS

    roger_LS 1-Year Member

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    Being ethical and doing a proper job doesn't have anything to do with how much you are getting paid. If you're unethical, you'll find a way to cut corners somehow or another. To keep and attract good talent in the profession we need to be making good money, like doctors, lawyers and some engineers. That won't happen if surveyors are so bad at business that they take on fixed cost low-ball bids during a recession, to be sure and make the least amount of money, then when times are good, set up hourly contracts to restrict the amount of money they are making to an arbitrary hourly rate when in cases you could be getting much more because the demand is there. Totally backwards!
     
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  7. Gene Kooper

    Gene Kooper 2-Year Member

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    Well, I suppose I could see folks interpreting the Board rulz in a similar light to Kent's interpretation. There are four "shall nots" and four "shalls" in that section of the rules after all.

    From my meager understanding of Texas Board Rules, I can see it being an ethical violation if a Texas RPLS is forced to resort to RTK surveying to stay profitable with the fixed fee.
     
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  8. Kent McMillan

    Kent McMillan Banned

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    The conflict of interest rules, however, recognize that surveyors do have self interest that can run contrary to a client's interest. A surveyor who knowingly puts himself in a situation in which, for example, he discovers that he will lose money to provide a service of given scope to a client for an inadequate fee and with no expectation of recouping the loss, has created a dynamic that works against his client's interest.

    I suppose that a surveyor could mitigate the ethical lapse by notifying his client that he has discovered himself to be in a position where many surveyors would be inclined to cut corners or he could withdraw from the project and return any monies received. To me, it seems much more straightforward and consistent with professional ethics not to put oneself in the position in the first place. I realize that many surveyors prefer slick business practices to professional ethics, but I think it's a bad choice.
     
  9. thebionicman

    thebionicman 3-Year Member

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    When a person assumes other Professionals will take an unethical course in a given situation its usually one of two things.
    1. A reflection of their own (sub par) ethics.
    2. Narcissistic personality disorder.
    Occasionally its both.
     
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  10. Kent McMillan

    Kent McMillan Banned

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    Actually, most ethical professions have similar ethical rules and It doesn't describe reality to claim that the rules are unnecessary. By your standard, no members of any licensed profession would ever be subject to disciplinary action which doesn't come close to passing the laugh test, of course.

    The rule is intended to balance the unequal relationship between professionals and their clients since a professional is perfectly able to have self interests that the client would not be aware of, but would need to be in order to make an informed choice. This is a foundational principle of most ethical professions.
     
  11. thebionicman

    thebionicman 3-Year Member

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    There you go again making crap up.
    Value pricing us not intended to be cheap. If the value of a Professional service is less than i can charge and make money i wont provide it. As usual your entire statement us built on mischaracterized or plain made up crap.
     
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  12. Kent McMillan

    Kent McMillan Banned

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    So, are you taking the position that most ethical professions do not have similar rules about conflicts of interest or are you just objecting to the idea that fixed price fees can create significant conflicts of interest?
     
  13. eapls2708

    eapls2708 7-Year Member

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    Broad brush logic almost always has a fatal flaw. Many very ethical surveyors work on fixed fee for many projects. There are some projects where by the foreseen conditions or the nature of the work, fixed fee is unworkable as the level of effort just can't be reasonably estimated.

    However, many projects can be reasonably estimated. If has enough experience in a community, they are quite familiar with the records, who has done work in the area, the quality of that work, the existence of certain monuments and the likelihood of whether additional monumentation required for a project exists. On some projects, such as topo mapping where the boundary has already been recently surveyed, the site conditions will be the primary consideration. Knowing the site conditions, an experienced surveyor should be able to estimate field & drafting time pretty accurately. Construction staking usually has a few additional considerations (i.e. who is the prime contractor, who did the design, anticipated schedule, etc.), but in most cases, should be something that can be estimated with reasonable accuracy.

    Many clients want to know up front how much they should budget, and an ethical surveyor who can 1) estimate project budgets that allow for completing projects properly and thoroughly while also building in a reasonable profit, 2) can co a good job of convincing clients of the value, and 3) can do those consistently, is doing these clients a service. If most of those projects result in a reasonable profit, the occasional monetary loss of having to properly complete a project on an underestimated project is accounted for. I know many surveyors who try to use fixed fee as often as possible and who willingly eat the losses, considering them an investment in reputation of always providing excellent service.

    One of the keys to making fixed fee work is contractually accounting for circumstances that occasionally arise but aren't necessarily expected on the project at hand, or those that are foreseen but contractually discouraged. Some examples for boundary might be that for a project that looks very straightforward at the onset, the requirement to file a record of survey is not expected (in CA, an RS is required only if certain conditions are encountered; depending on the county, the review and filing fees alone can be $2000) but it is always a possibility. A contract clause that requires the client to pay the governmental fees plus fees to the surveyor for additional efforts required (may be either a fixed amount or by hourly rate) is a prudent thing to include. In some areas, important survey records of decades past might only be in private hands and are generally available at a fee of a few dozen to a few hundred dollars. If working in an area where the need to consult such records is somewhat common, a clause to cover that is prudent. For topo and construction, a clause that the site be properly prepared and reasonably free of obstacles is a necessity. For construction staking, a minimum amount of work per day clause and a one-time staking clause are both essential. Depending upon the project and conditions that might be site-specific, local, or regional in character, or sometimes dependent upon the parties involved would dictate the prudence of other similar clauses.

    About now, Kent is saying "Aha! See. Slick business practices. An ethical surveyor would never hide additional fees in the fine print!"

    That's valid, if that's what's done. The ethical surveyor takes the time to apprise the client of those potential fees, explaining what circumstances might make any, some, or all become necessary. The surveyor and client can both use them as contingent budgeting tools, and the client can also take steps to ensure that the conditions that are within his or her control do not precipitate some of the circumstances that will add costs (i.e. site prep and restaking). A conditioned fixed fee essentially gives the client a range of costs with a minimum (the initial contract fee), that ties any increases to specific circumstances.

    It's not much different that contracting to do the job by T&M with an estimate. The difference being, that when circumstances do arise that require additional time and materials to be expended by the surveyor, with a T&M contract, the client often isn't apprised well ahead of time what types of circumstances would cause the increase. They generally don't have a good way of knowing whether the circumstances are irregular such that they would warrant extra fees, or if they were something that the surveyor should have foreseen an accounted for before starting the job.

    Where surveyors tend to get in trouble with fixed fee is when they feel they need to go low in order to get enough work to keep the lights on because all their competition bids low on fixed fee or where they allow a client to believe that "buying" a survey is like buying a car, the whole transaction being an exercise in skillful negotiation to get the "product" at the best possible price.

    While there certainly are those that operate on fixed fee in an unethical manner, there are also many who do it in a way that serves the client well in terms of fiscal information while not compromising on serving the client well with a complete, thorough, professional service. Those who are prone to cut corners have generally decided to cut corners as standard operating practice long before giving any particular bid to any prospective client.

    Like most any other common practice in surveying, it's not the type of practice itself that determines whether the work is performed correctly/professionally, but the application and execution of the practice by the individual surveyor or company.

    The broad brush just doesn't cover well.
     
  14. guest378

    guest378 Guest

    I don't believe that the conflict of interest stated is intended to be defined as an individual conflict of interest in relation to costs.
    Errant pricing is a business blunder not an ethics issue.
    Yes, the low ballers and others who undercut fair pricing are not practicing in a professional manner. But it is not a conflict of interest. More like a failure to perform under contract or breach of contract.
    I think I see what your intentions are by thinking outside of the box but I don't see it happening.

    There is a local survey folk myth here about a small firm that put in a bid with the state for a boundary of a new wildlife management area many years ago. Large job with the need for crew boats, airboats and multiple crews to get the work done. There bud was much lower than anyone else and they were disqualified immediately by the state. By consensus of opinion of surveyors who knew some of the details, the firm did try to be somewhat low on their bid but were totally ignorant about how low to be. Cluelessness led to their extremely low bid.
     
  15. eapls2708

    eapls2708 7-Year Member

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    The problem is with the premise that mention of "financial" conflict of interest translates to mean "fixed fee" coupled with the premise that contracting by fixed fee will eventually always necessarily result in a surveyor feeling insurmountable pressure to do substandard work rather than risk losing money on a project.

    In fact, "financial" conflict encompasses a whole lot more and was probably primarily intended for other forms of financial conflicts. For example, subdividing a parcel that you own, there may exist, at a minimum, the appearance of a conflict in that if you fudge you measurements up just a little, you could fit one more lot which sells for $100,000. You may sit on the City Council and your company has contracts to provide services to the City. Although cutting corners to meet budgets would fall within that code, it is more likely the legislature was considering situations where the surveyor is in a position to unfairly steer work toward himself or where falsifying data of one's survey would somehow unjustly enrich the surveyor.


    I agree with Robert that low bids are usually business blunders rather than a matter of poor ethics. But I also see your point in that there are those, and they are not rare, who as a matter of standard business practice, operate on a model of competing on price. And that hand in hand with that, their standard professional and technical practice is to perform less than thorough work in research, field work, and analysis, usually resulting in improperly performed surveys.

    Both exist, but the use of fixed fee alone is not an indicator of the state of one's ethics.
     
    Last edited: Apr 20, 2017
  16. gschrock

    gschrock 7-Year Member

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    I would tend to agree.

    btw: I am of the ilk that goes the route of a (non-binding) estimate, a retainer, and an hourly rate.
     
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  17. thebionicman

    thebionicman 3-Year Member

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    I take the position that the rules don't prohibit fixed price fees. If a person prices for value with a well structured contract losses will be rare and clients will be happy. If a potential loss leads them to ethical compromise they were there already.
     
  18. Kent McMillan

    Kent McMillan Banned

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    I wouldn't say that the conflict of interest rule is focused on problematic financial arrangements,, but on any arrangement that would be expected to compromise the impartial delivery of services. However, I would say that most of the problematic financial arrangements that I observe in relation to work that surveyors undertake originate from fixed fees.

    As I analyze the ethical considerations inherent in the business arrangements that surveyors make with their clients, the most significant point is the inequality inherent in the transaction. The licensee should almost always understand what is truly necessary better than the layperson with whom he or she contracts. This gives the licensee a tremendous advantage in that the client typically lacks the means to know whether what was done was sufficient or not.

    It isn't the client who, when presented with a piece of paper with a jazzy North arrow, asks the surveyor to explain how it could be that he or she determined the boundary of the tract delineated upon it with no stated relation to any instrument of record, for example. Likewise, it isn't the client who wonders why the surveyor who signed the map also thought it was a cool idea to mention various details that a competent surveyor would recognize as prima facie declaration that the work failed to meet minimum standards.
     
  19. Kent McMillan

    Kent McMillan Banned

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    Conflict of interest generally means anything which might be reasonably expected to sway an independent professional judgment on any matter related to a professional service. Doctor owns stock in medical imaging center and makes a custom of referring patients there even though the charges are higher? Conflict of interest. Surveyor agrees to provide professional services on terms that result in losses for him as the service is performed, thereby shaping his professional decisions about what else should be done? Conflict of interest.
     
  20. Kent McMillan

    Kent McMillan Banned

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    Yes, in my opinion a good-faith, non-binding estimate, a retainer, and an hourly rate are just about the only terms under which professional surveying services should be offered to the public by any ethical surveyor unless the scope of the work is so well-known that there is absolutely no chance of the work required exceeding some initial estimate.

    The fixed fee or Manufacturer's Suggested Retail Price is a great tool for internet survey brokers, but not much else.
     
    Last edited: Apr 20, 2017
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