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2016 Summer Olympics, Term Paper Example

Pages: 8

Words: 2149

Term Paper

Contract Management during the Rio World Cup game in 2014

Primarily, the problem with handling contracts that occurred during the World Cup is the misconception of who would be the most responsible individuals to handle the contracts that were being handed out. Instead of investigating further on what particular companies would be asked to handle the projects, the administrators missed the connection that some of the organizations were facing issues related to corruption especially regarding the top executive officers leading the organizations such as projects mangers and operational directors. One of the executive officers that involved in corruption during the competition include Andrade Gutierrez who won the bid to build and renovate stadiums in the country1 Andrade Gutierrez raised the cost of prefabricated grandstands from $4,700 to $1.5 million. The contracts that were handled then incurred particular failures due to the lack of policies and rules such as contract monitoring rules to evaluate the ability of the country to host the World Cup. However, contracts have already been made with five primary building and engineering companies and the officials are already assigned to make sure that such contracts would be handled with full control and determination of value that the said organizations are expected to deliver for the sake of the success of the event being prepared for. Furthermore, World Cup construction delays due to corruptions came with litigation. All disputes are resolved in Brazil through a state-court that set no specific date to resolve construction disputes. As a result, there were some construction delays in the world cup. As elsewhere in the world, alternative methods of dispute resolution as arbitration or mediation can help resolve disputes without incurring the delay in the project.2 Dispute adjudication boards (DABs) is therefore an increasing popular option to both preserve relationships and minimize delays. Dispute boards are an alternative model for avoidance and timely resolution of construction disputes.3

Rio Olympic Games Contract Management Situation Now

To date, there are already more than 10 billion worth of contracts that have been signed and have already been spearheaded by the parties involved most of which are dedicated to infrastructure developments. Managing the validity and the completion of the clauses written within these contracts is an important part of the success that the Brazilian administration hopes to get as Rio de Janeiro takes center stage in hosting the 2016 Olympics. Looking through every detail of the project completion is one part of the strategies taken into account by the Federal Police of Brazil in order to make sure that the mistakes incurred during the preparation of the World Cup event would not happen again. The Sao Paulo Brazilian based police officials are also currently investigating various corruption cases in the society including the $10 billion construction contract for the 2016 Olympic Games in Rio de Janeiro.4 This includes the investigation of the state run oil firm Petrobras and other big engineering firms that were accused of involving in corruption activities in the society. It is evident these firms did not follow the price-fixing policies and also involved in bribery on contract in order to allow them build Olympic venues in the country. Price-fixing involves setting the amount of money to be used in awarding firm contracts in the society. Due to lack of price-fixing rules the firm involved in the contract increase the costs of the contracts. This bribery practices has led to contracts being awarded to firms that gives bribes in the society. Example of the bribery contract includes the Petrobras corruption scandal where engineering firm were involved in direct bribery practices in the society. The federal police officers also argue that there are several bribery activities surrounding the Olympic Games contracts in the country. According to the Brazilian chief police investigator, Igor Romario it is evident that the police officers are doing everything to avoid and prevent contractual corruption activities before the Olympic Games in 2016. This includes investigating and arresting of individuals who are part of the various contractual corruption scandals in the country. The police also indicate that they have not managed to uncover enough evidence the contractual based corruption cases but they are making a lot of efforts in order to ensure that they unearth material proof of corruption in the country.

It is also true that five out of the total twenty four engineering firms which are being investigated for the Petrobas corruption scandal by the controller general department in the country are currently working and building Olympic venues in the country. Some of the organization being investigated include the Odebrecht South America firm as well as the Andrade Gutierrez South America firm. These firms have been awarded infrastructure-building activity in the country worth $ 10 billion. The firm mainly achieved the contract through corrupt procedures. This is viewed as a form of wasting public funds in the society.

The police also argued that the Odebrecht CEO, Marcelo Odebrecht was involved in the Petrobras corruption scandal activity during the Olympic Games. The OAS South America firm CEO was arrested concerning the Petrobras corruption Scandal and sentenced to sixteen years and four months in prison. The OAS South American firm was one of the sub-contractors in the Petrobras energy based firm in the country and accused of taking bribes from engineering and construction companies in the society in order to increase the monetary value of the contract. This is a form of corruption that should be avoided in the country. The police is also investigating the Worker’s Party, which is the ruling party in the country. The party executive officials were accused of promoting contractual based corruption activities in the country. There are those who argue that the contractual corruption scandals in the country will negatively influence the economic development and growth of the country in the next five years. For example, high levels of contractual corruption cases will scare away investors from investing in the country leading to low GDP. Corruption will also lead to a lot of wastage of the public money due to lack of proper accountability. The operation Car Wash investigation is also currently being carried out by the Brazilian police officers in order to identify the major parties behind the Petrobras corruption practice in the country. This has led to police arresting several individuals in the country including senators and CEO of one of the largest investment bank in the country. Some of the factors that led to high levels of corruption scandals in the country include lack of proper corruption monitoring systems, poor social justice systems and poor judicial systems in the country. However, the government has created an oversight contract management group to investigate and report all the corruption practices regarding the Petrobras corruption scandal in the country. Furthermore, the organizing committee has supported the development and implementation of a novel program of DABs for each of the approximately 35 contracts and service agreements for the nonpermanent structures required. The unique and distinctive feature of dispute boards, in contrast with arbitration and litigation, is that dispute boards can operate from the beginning of contract performance and contemporaneously with the performance of the contract. Dispute boards are composed of one or three individuals, usually experienced engineers, architects and construction lawyers, who operate under pre-established rules and are compensated by the parties in equal shares for their services. This effective alternative dispute resolution model allows highly experienced professionals to provide assistance to the contracting parties so that disputes can be avoided, and provides timely recommendations or resolutions. However, DABs authority does not include dispute in corruption matters. Corruption cases are being referred to law enforcement authorities to investigate the issue that may delay the process of construction.5

Lessons Learnt and Recommendation for Future Olympic Games in 2016

Due to this, the police and the government in Brazil should ensure that all the contracts related to construction of Olympics infrastructure and venues are free from corruption activities. The government agencies should also work closely with the local communities in detecting and identifying contractual practices in the country. This will help in proper investigation of all corruption cases concerning Olympic Games contracts in the society and ensure that the evidences gathered are used in order to severely punish the firms involved in corruption scandals in the country. Reduction and control of corruption cases in the country will improve the economic development and growth of the country.6 The government should also develop an independent body that can help in investigating all the contractual corruption practices in the society. For example, creating an independent non-governmental organization can help in monitoring and investigating all the contractual corruption activities and act as a watchdog towards corruption practices in the society. This will help in investigating and reporting all the firms involved in contractual corruption practices in the country. Provision of strict rules and penalties on those involved in contractual corruption scandals in the society can also help to reduce future corruption activities in the country and delay in construction dispute process. In order to ensure that DABs members not to delay construction dispute cases related to corruption, the team must establish mitigation policy on how to move the project forward once corruption cases has been identified. It is important to know that since DABs does not have authority to determine the responsible party in corruption matter; however, DABs must identify a person to manage the contract that is being under investigated to prevent and minimize the risk of delay. Contract activities and practices in the society should be provided through the application of current technological tools in order to promote proper monitoring and evaluation of all the contract operations in the country. This can involve the application of surveillance cameras to monitor contract agreement negotiation, and the use of direct contract bidding between two parties to eliminate third party corruption in government offices dealing with contractual activities in the society. The use of electronic data systems will provide proper and effective tracking of corrupt activities in different contractual firms in the society. This will reduce the high levels of contractual corruption cases in the country. Implementation of anti-corruption reforms can also help in reducing corruption problems in the country. This may include the provision of media based campaigns in radios and television in order to discourage contractual corruption in the society. Contract selection procedures should be transparent and based on ethical code of conduct in order to reduce corruption in the country. The government should also educate the public about the negative effects of involving in contractual corruption activities in the society. This will promote the public awareness and knowledge about the various practices that increase contractual corruption activities in the society allow them report such practices to the relevant authorities.

Works Cited

Rio2016. Olympics Official Website. http://www.rio2016.com/en/transparency/budget(Retrieved on December 8, 2015).

Gagne, D. (2015). Brazil to Investigate Olympic Contracts Worth $10 Bn. http://www.insightcrime.org/news-briefs/brazil-to-investigate-10-billion-in-olympic-contracts (Retrieved on December 2, 2015).

GCR Staff. Hill wins pair of contracts for Rio 2016 Olympics. http://www.globalconstructionreview.com/news/hill-wins-pair-contracts-r8io-2016-o8ly6mp8ics/. (Retrieved on December 2, 2015).

Jerry P. Broadsky (2014). Building To Gold in Rio. http://www.law360.com/articles/653873/building-to-gold-in-rio-lessons-from-past-olympics (Retrieved on December 2, 2015).

Michael Regan (2014). Brazil’s World Cup Woes. https://www.mayerbrown.com/files/News/ce597704-1f98-40cb-b47d-a25c7ca0b80e/Presentation/NewsAttachment/89945fd8-7ee5-4806-805c-a27ca053c384/art_regan_may14_brazil.pdf (Retrieved on December 2, 2015)

1GCR Staff. Hill wins pair of contracts for Rio 2016 Olympics. http://www.globalconstructionreview.com/news/hill-wins-pair-contracts-r8io-2016-o8ly6mp8ics/. Retrieved on December 8, 2015).

Gagne, D. (2015). Brazil to Investigate Olympic Contracts Worth $10 Bn. http://www.insightcrime.org/news-briefs/brazil-to-investigate-10-billion-in-olympic-contracts. (Retrieved on December 8, 2015).

The Federal Police is taking no rest in identifying possible sources of project commotion so as to make sure that the financial assets dedicated for the 2016 Olympics would not be wasted nor would it fall in the wrong hands.

2 https://www.mayerbrown.com/files/News/ce597704-1f98-40cb-b47d-a25c7ca0b80e/Presentation/NewsAttachment/89945fd8-7ee5-4806-805c-a27ca053c384/art_regan_may14_brazil.pdf

3 https://www.mayerbrown.com/files/News/ce597704-1f98-40cb-b47d-a25c7ca0b80e/Presentation/NewsAttachment/89945fd8-7ee5-4806-805c-a27ca053c384/art_regan_may14_brazil.pdf

4 Although no wrong doing among the contract holders were reported yet, Romario and his team were directed to see through every process that the contract signatories agreed to respond to. Romario admits that some of the contract holders have executive who have records of corruption in the past; nevertheless, they were not going to let the same thing that happened in 2014 FIFA happen during the preparations for the 2016 Olympics.

5 http://www.law360.com/articles/653873/building-to-gold-in-rio-lessons-from-past-olympics

6 Gagne, D. (2015). Brazil to Investigate Olympic Contracts Worth $10 Bn. http://www.insightcrime.org/news-briefs/brazil-to-investigate-10-billion-in-olympic-contracts. (Retrieved on December 8, 2015).

GCR Staff. Hill wins pair of contracts for Rio 2016 Olympics. http://www.globalconstructionreview.com/news/hill-wins-pair-contracts-r8io-2016-o8ly6mp8ics/. Retrieved on December 8, 2015).

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