Responsible Decision Making. To Declare or Not?

It is like a conflict of interest. You should notify the sponsor and stakeholders and discuss the details.

Albert,

as everyone has said, you need to disclose this conflict of interest out of ethical considerations, maybe out of legal ramifications in your legislation.

Further, during the project, there will probably be decisions to be made by the PM who support one interest and go against the other. Those decisions may be stressful and hard to defend if challenged. Better to avoid this.

One way to mitigate this situation might be to change acting ownership of your company by e.g. installing a CEO.

Thomas

You have a point there Keith. The question here is, you are going to supervise the activities of the same firm you are supplying to as a vendor. Wouldn't it be difficult drawing the lines between the two relationships thereby falling in the trap of not holding the Construction company to book in the event that they violate a contractual obligation? Your sense of making the right decision may be questioned. The best is to just let one of the opportunities go so you are free from any form of conflict of interest situation...

What do you think?

You are absolutely correct that there may be the appearance of conflict of interest regardless.

If the contracts are lucrative enough, extra layers of process requirements may be created to mitigate the risk. The PM for instance would not be the same for both projects. There may be specific processes and/or contract language depending on who is responsible for the sub-tier performance work and whether it is firm-fixed-price, or cost plus incentive for example. Large corporations will sometimes spin-off whole new business units operating as separate companies to avoid any appearance of self dealing in similar situations. Avoiding the extra layers of bureaucracy to avoid any appearance of an ethical dilemma is a good reason why many companies would avoid this situation altogether.

The risk with process enforced requirements however is that someone may choose not to follow the rules, and it is impossible to simply legislate by process that people do the right thing. Regardless of how many laws and internal governance requirements try to avoid it, there is generally a lot of added cost to provide safeguards, with no guarantee that people won't work around them.