Conflict of Interest

The PMI Code of Ethics and Professional Conduct discusses your responsibility to report to the stakeholders, customers, or others any actions or circumstances that could be construed as a conflict of interest.

A conflict of interest is when you put your personal interests above the interests of the project or when you use your influence to cause others to make decisions in your favor without regard for the project outcome. In other words, your personal interests take precedence over your professional obligations, and you make decisions that allow you to personally benefit regardless of the outcome of the project. Let's look at a few examples.

Associations and Affiliations

Conflicts of interest might include your associations or affiliations. For example, perhaps your brother-in-law owns his own construction company and you are the project manager who has just published an RFP. Your brother-in-law bids on the project and ends up winning the bid.

If you sit on the decision committee and don't tell anyone about your association with the winning bidder, that is clearly a conflict of interest. If you influence the bid decision so that it goes to your brother-in-law, he benefits from your position—again, a conflict of interest. You put your personal interests, or in this case the interests of your associations, above the project outcome. Even if you did not influence the decision in any way, when others on the project discover the winning bidder is your brother-in-law, they will assume a conflict of interest occurred. This could jeopardize the awarding of the bid and your own position as well.

The correct thing to do in this case would be to, first, inform the project sponsor and the decision committee that your brother-in-law intends to bid on the project. Second, refrain from participating on the award decision committee so as not to unduly influence others in favor of your brother-in-law. And last, if you've done all these things and your brother-in-law still wins the bid, appoint someone else in your organization to administer the contract and make the payments for the work performed by him. Also, make certain you document the decisions you make regarding the activities performed by him and keep them with the project files. The more documentation you have, the less likely someone can make a conflict of interest accusation stick.

Vendor Gifts

Some professionals work in situations where they are not allowed to accept gifts in excess of certain dollar amounts. This might be driven by company policy, the department manager's policy, and so on. I have worked in organization where it was considered a conflict of interest to accept anything from a vendor, including gifts (no matter how small), meals, or even a cup of coffee. Vendors and suppliers often provide their customers and potential customers with lunches, gifts, ballgame tickets, and the like. It's your responsibility to know whether a policy exists that forbids you from accepting these gifts. It's also your responsibility to inform the vendor if they've gone over the limit and you are unable to accept the gift.

The same situation can occur here as with the brother-in-law example earlier. If you accept an expensive gift from a vendor and later award that vendor a contract or a piece of the project work, it looks like and probably is a conflict of interest. This violates PMI guidelines and doesn't look good for you personally either.

ness to find out whether the organization has a conflict of interest policy and understand exactly what it says. Get a copy, and keep it with your files. Review it periodically. Put a note on your calendar every six months to reread the policy to keep it fresh in your mind. This is a case where not knowing what you don't know can hurt you.

Don't accept gifts that might be construed as a conflict of interest. If your organization does not have a policy regarding vendor gifts, set limits for yourself depending on the situation, the history of gift acceptance by the organization in the past, and the complexity of the project. It's always better to decline a gift you're unsure about than to accept it and later lose your credibility, your reputation, or your PMP status because of bad judgment.

Stakeholder Influence

Another potential area for conflict of interest comes from stakeholders. Stakeholders are usually folks with a good deal of authority and an important position in the company. Make certain you are not putting your own personal interests above the interests of the project when you're dealing with powerful stakeholders. They might have the ability to promote you or reward you in other ways. That's not a bad thing, but if you let that get in the way of the project or let a stakeholder twist your arm with promises like this, you're getting mighty close to a conflict of interest. Always weigh your decisions with the objectives of the project and the organization in mind—not your own personal gain.

Keep in mind that you might not always be on the receiving end of the spectrum. You should not offer inappropriate gifts or services or use confidential information you have at your disposal to assist others because this can also be considered a conflict of interest.

Using the "I didn't know there was a policy" reasoning probably won't save you when there's a question of conflict of interest. Make it your busi-

Real World Scenario

The Golf Trip

Amanda Lewis is a project manager for a network upgrade project for her organization. This project will be outsourced to a vendor. Amanda will manage the vendor's work. She also wrote the RFP and is a member of the selection committee.

The project consists of converting the organization's network from 100MB Ethernet to Gigabit Ethernet. This requires replacing all of the routers and switches. Some of the cabling in the buildings will need to be replaced as well. The RFP requires that the vendor who wins the bid install all the new equipment and replace the network interface cards in each of the servers with Gigabit Ethernet cards. The grand total for this project is estimated at $1.2 million.

Steve James is a vendor with whom Amanda has worked in the past. Steve is very interested in winning this bid. He drops in on Amanda one day shortly after the RFP is posted.

"Amanda, it's good to see you," Steve says. "I was in the neighborhood and thought I'd stop in to see how things are going."

"I'm great" Amanda replies. "I'll bet you're here to talk to me about that RFP. You know I can't say anything until the whole process closes."

"You bet we bid on the project. I know you can't talk about the RFP, so I won't bring it up. I wanted to chat with you about something else. My company is sending 15 lucky contestants and one friend each to Scottsdale, Arizona, for a 'conference.' The conference includes the use of the Scottsdale Golf Club (green fees paid, of course), and all the hotel and meal expenses are on us for the length of the trip. I know Scottsdale is one of your favorite places to golf, so I thought of you. What do you say?"

Amanda sits forward in her chair and looks at Steve for a minute. "That sounds fabulous, and I do love Scottsdale. But you and I both know this isn't a conference. I wouldn't feel right about accepting it."

"Come on, Amanda. Don't look a gift horse in the mouth. It is a conference. I'll be there and so will the top brass from the company. We have some presentations and demonstrations we'd like to show you while you're there, no obligation of course, and then you're free to spend the rest of the time however you'd like."

"I appreciate the offer. Thanks for thinking of me, but no thanks. I'm on the selection committee for the RFP, and it would be a conflict of interest if I attended this conference. Besides, the value of the conference is over the $100 limit our company sets for vendor gifts and meals," Amanda says.

"OK, we'll miss you. Maybe next time."

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  • Stephan
    Is conflict of interest of stakeholder risk for a project?
    1 month ago

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