Methodology for Conducting Third-Party Risk-Based Due Diligence in the Construction and Civil Engineering Industry
Publication: Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 14, Issue 4
Abstract
This paper aims to propose a methodology for conducting third-party risk-based due diligence in an engineering and construction company. A case study presents the methodology for a multinational firm. Due diligence is necessary and often mandatory, depending on the client or project. It protects a company in case of an ill-intentioned third party conducting misconduct while under contract or relationship with the company, but has been overlooked in many industries, resulting in ethics- and compliance-related misconduct. This study reveals that risk-based due diligence methodology has been widely applied and discussed by brokers and accountants, but that no research has verified whether the methodology applies to the construction and engineering industry. The case study also highlights the importance of knowing and understanding the company’s business model, its appetite for risk, and its global interactions within its industry. The proposed methodology enables risk assessment and due diligence covering integrity-related risks among third parties. By adapting the model to their reality, construction and engineering companies manage third parties’ risks related to corruption and bribery, antitrust and competition, human rights, conflicts of interest, and compliance with regulations. The expected result of the methodology is a risk-tailored and resource-efficient process for conducting third-party due diligence in the construction and engineering industry.
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Data Availability Statement
All data, models, and code generated or used during the study appear in the published article.
Acknowledgments
This research was fully supported by SNC-Lavalin and the Mitacs Acceleration program. We thank our colleagues from the Integrity Department who provided great expertise in the research. The authors would also like to thank Professor Marc Tassé, member of the Canadian Centre of Excellence for Anti-Corruption and of the University of Ottawa, for his insights and support throughout this research.
References
List of Statutes
Securities Act of 1933, Pub L 73-22, 48 Stat. 74, 15 U.S.C 77a.
UK Bribery Act 2010, UK Public General Acts, 2010 c.23.
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Published In
Journal of Legal Affairs and Dispute Resolution in Engineering and Construction
Volume 14 • Issue 4 • November 2022
Copyright
© 2022 American Society of Civil Engineers.
History
Received: Sep 10, 2021
Accepted: May 5, 2022
Published online: Jul 14, 2022
Published in print: Nov 1, 2022
Discussion open until: Dec 14, 2022
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