Client Alerts & Publications

Compliance Programs – When They Work and When They Don’t

In today’s regulated economy, compliance programs are a necessity across most industries. That is no less so for the construction industry.

How a compliance program is developed, whether it is tailored to a particular company, how it is viewed and supported by management, and whether it is “genuine” are all important considerations in determining whether a compliance program will be effective, whether it will protect the company and its employees, and whether it will create a culture of compliance.

There are two basic approaches in determining why a company should have a robust compliance program and they are not mutually exclusive. The first approach involves a company’s decision to define itself as a responsible corporate citizen because its leadership believes that is the appropriate way to conduct business. The other is self-protective—a company with a robust compliance program is more likely to benefit from employees who are aware of the risk of non-compliance and committed to avoiding the consequences of that risk.

Perhaps the most critical overall factor in developing a compliance program is to gain from the best in human motivation and avoid the consequences of the worst.
Why Have a Compliance Program?
Federal and state prevailing wage laws, false claims with both civil and criminal implications, OSHA, environmental regulations, building codes, set aside programs, and a host of other laws and regulations have made doing business more complicated and costly, and have placed construction companies and their employees in need of compliance programs that guide them through the regulatory maze and the accompanying legal risks. Any construction company that wants to conduct its business in compliance with all these laws and regulations and thus avoid costly mistakes and damage to its reputation has little choice but to put a compliance program into place. Any construction company that does not recognize the value of this approach is making a serious mistake as the costs of non-compliant conduct can reach shocking levels. Those costs can include the loss of business opportunities, the inability to work for government entities, civil lawsuits, and perhaps even criminal prosecution. Companies whose names appear in the media for the wrong reasons or who do not appear to do business in an honest and compliant way pay a high price for their failure to avoid non-compliance.

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