F-6: Misleading Gold Report

Statement of the Case: Geoscientist A wrote a report on a gold prospect for a junior resource

company active on the Vancouver Stock Exchange (VSE). The report was intended to be a

factual history of the numerous test results at a specific site, including drill locations, summaries

of drill logs, and assay results. Geoscientist A used accurate numerical data in the report, but

added a few subjective adjectives. One example, among several similar statements in the report,

was this: “Assays on samples recovered from drill holes 6–14 revealed a very respectable 0.01

ounces of gold per tonne average, with some samples as rich as 0.03 ounces per tonne.”

After the report became public, the company’s share price rose sharply on the VSE. However, no

gold mine was constructed on the site, and the share price eventually dropped to a very low

value. Many shareholders, who had purchased shares at high values, now found the shares

almost worthless.

[Assay:the testing of a metal or ore to determine its ingredients and quality:

• "submission of plate for assay"]

Question: Were these statements by Geoscientist A professionally acceptable?

Outcome: The shareholders complained to the VSE and to the provincial Association that the

report written by Geoscientist A was misleading and demanded some disciplinary action, on the

basis that Geoscientist A’s use of the subjective adjectives constituted a personal opinion that

gave an inflated impression of the value of the property.

Authors’ Comments: Geoscientist A should not have used such subjective expressions as “very

respectable” or “rich” to describe the significance of the numerical data. Although Geoscientist

A summarized the data accurately, adding these subjective modifiers might have altered the

interpretation of the data by others. Such comments likely would not satisfy the requirements in

National Instrument 43-101, which came into effect on February 1, 2001. Geologists must follow

this document when disclosing information on mineral projects in Canada. The document

specifies the format for making oral statements or written disclosure of scientific or technical

information to the public concerning mineral projects. (See Chapter 2 of the text for a full

explanation.)

Whether deliberately or inadvertently, Geoscientist A did not follow accepted practice and

neglected the duty to the public, as required by the Code of Ethics. The Association would likely

feel obliged to take some action on such a complaint, but the complaint might easily be resolved

before reaching the disciplinary hearing stage, depending on the geoscientist’s explanation and

previous record. 

F-7: Commissioning of Sewage Plant

 Statement of the Case: A consulting engineering company was awarded the contract for

designing, preparing the specifications, and providing “field inspection services” (monitoring the

construction) of a sewage treatment plant being built for a small municipality. The construction

proceeded routinely to completion. The consulting company employed Engineer A, an environmental engineer experienced in wastewater treatment, to assist in the field inspection.

During the final commissioning of the plant, Engineer A observed that the biochemical oxygen

demand (BOD) of the effluent was frequently above the acceptable limit.

Engineer A contacted the design office at his engineering company, and after reviewing the case

with an environmental consultant, he soon realized that the plant had been designed for average

flows, but several food-processing industries in the municipality occasionally fed “slugs” of raw

sewage to the plant. The biochemical oxygen demand would increase rapidly when one of these

slugs arrived and would remain above the regulated limit for a few days, before moving back

down below the limit.

Engineer A concluded that, on days when these slugs were being

processed, the plant would not meet the effluent quality standards. The specifications had been

set by the engineering company’s design office, which had used the average sewage flow

estimates. He faced a serious decision, and identified three courses of action. Should he

 disclose this deficiency to the municipality (the client), thus implicating the engineering

company (his employer) as responsible for the inadequate design, or

 selectively sample the plant effluent between slug discharges, thus falsifying the true nature

of the problem, or

 provide “average” readings in his commissioning report, which might be a defensible

compromise?

Question: What should Engineer A do, in this situation?

Outcome: Engineer A concluded that he must act as a faithful agent of the client, even if it

created problems for the engineering company employing him. He met with engineers from the

municipality and explained that the sewage plant was unlikely to pass the commissioning tests

because of the “slug” discharge problem. The municipality was unaware of this problem and

immediately requested an explanation from the food-processing industries. After a lengthy

negotiation, the industries agreed to make structural changes to piping that would make the

sewage flow more constant and to build an “equalization” basin upstream from the sewage plant,

where the slug flows would blend with other flows, thus providing a much more constant sewage

flow, which the plant could process. The municipality contributed the land, the engineering

company agreed to design the equalization basin as a public service, and the industries agreed to

an increased mill rate to cover construction and maintenance costs for the basin.

Authors’ Comments: Truth was essential. The truth would have become obvious, eventually,

and a lawsuit would have followed. Professionals always prefer solutions to lawsuits.

F-8: “Low-Ball” Cost Estimate

 Statement of the Case: Engineer A was a member of an ad-hoc citizens’ committee, which

wanted the municipality to build a small recreation centre in their neighbourhood. The ad-hoc

committee believed that the Municipal Council would not approve the project if they knew the

true estimated cost. Engineer A volunteered to prepare a “low-ball” estimate for constructing the

recreation centre, at about 60 percent of the realistic likely cost, and the ad-hoc committee

formally presented this estimate to the Council. The committee presented Engineer A as an

independent and impartial consultant. There was no information in the documents submitted to show that Engineer A resided in the neighbourhood or was, in fact, a member of the ad-hoc

committee making the proposal.

Question: Did Engineer A act ethically in this project?

Outcome: The Municipal Council accepted the cost estimate, because a Professional Engineer

had prepared it. After a short debate, the Council approved the design phase of the project

without seeking another cost estimate. When the design was completed and tenders called, the

true cost of the project became apparent, but the public expected the project to go ahead; the

Council worried that there might be political repercussions if the recreation centre project were

cancelled. Moreover, they had already paid the design costs for the project. Council continued

the project and constructed the recreation centre.

However, upon inquiring, Council members soon learned that Engineer A was a resident of the

area and a member of the ad-hoc committee. On the advice of legal counsel, the Municipal

Council voted to ask the provincial Association to discipline Engineer A for failing to reveal a

conflict of interest in preparing and submitting the original cost estimate.

Authors’ Comments: Although Engineer A may have believed that it was a public service to

use deception to construct the recreation centre, the engineer made two serious errors. Failing to

reveal a conflict of interest is a clear violation of every Code of Ethics. Moreover, giving a

deliberately incorrect cost estimate to induce someone to do something is a serious offence,

punishable by civil or criminal proceedings, depending on the circumstances. Engineer A should

have provided a realistic and honest cost estimate, and relied on the merits of the project to

convince Council.

F-10: Poor Inspection of Remote Site

Statement of Case: An equipment dealer was developing a new depot (warehouse) in a small

town. A large architecture/engineering firm from a distant city designed the building for the

depot. Engineer A was Project Manager for the firm. Engineer B, a sole practitioner, lived in the

small town and offered her services to Engineer A, to perform site inspection. She said that her

office was close to the site, and she could easily serve as a resident engineer. Although the

project was large, Engineer A declined Engineer B’s offer because there was not enough money

in the fixed-sum contract to cover the costs of a resident engineer. Instead, Engineer A intended

to make short visits to the site, every second week, on a regular basis.

The depot building was to be built of concrete block, with a partial second storey for offices.

There was some structural steel in travellers and roof trusses. The foundation for the walls was a

strip footing, about 1.2 m below grade. When the contractor excavated for the footing, the

ground was uneven, and the contractor poured one side of the strip footing on exposed,

thoroughly frozen ground. This work was done while Engineer A was absent from the site and

backfilled before his next visit. Engineer B observed how the pouring had been done and

reported it to Engineer A. She again offered her services, offering to reduce the cost by attending

the site only at critical stages, on short notice from the contractor, when these critical events

occurred between Engineer A’s visits. Engineer A again declined and took no action with respect

to her report of poor workmanship in the footing construction.

Question: Was Engineer A acting in a professional manner by attempting to monitor and inspect

a project from a distant location?

Outcome: Shortly after occupancy, the building began to settle, where footings had been poured

on frozen ground. Expensive underpinning was necessary to rehabilitate the structure. The

lawyer for the equipment dealer initiated a lawsuit against the architecture/engineering firm, and

against Engineer A, to recover the costs of the underpinning. 

Authors’ Comments: By failing to monitor the footing construction—a key stage in any

structural project—Engineer A did not provide an adequate level of field service and, therefore,

did not act as a faithful agent of his client. 

Since the project was large, Engineer A should have included full-time inspection when fees were negotiated with the client.

If Engineer A was not successful in obtaining adequate fees for field services, he should have informed the client in writing of the risks associated with inadequate inspection. 

The Code of Ethics requires full disclosure of the consequences when key technical decisions are overruled.

If the client refused to fund the recommended inspections, Engineer A should have scheduled the inspections for critical stages, such as footing excavation, placement of re-bar, and concrete mixing and

placement, rather than fixed dates. Alternatively, he should have arranged with Engineer B to

make some of these inspections. Engineer B acted very professionally by informing Engineer A that the footings were poured on frozen ground, but Engineer A compounded the problem by ignoring it. He should have made a special site visit to investigate and should have required the footings to be replaced. Site inspection is extremely important. Many structural failures are the result of low-quality

materials, poor construction methods, or sloppy work that is easily remedied in the early stages

of construction. Full field services and inspection provide confidence and guarantee good

quality, thus justifying the investment.

F-11: Conflict of Interest in Building Inspection

 Statement of the Case: Engineer A is the only civil engineer in a small town in a remote area of
Canada; the other engineers in the area are all mining engineers. Engineer A has a broad
background, including sewer and water, roads, bridges, structural design, and building
construction and inspection. His wife owns four commercial buildings in the downtown area. On
a sunny day last summer, a major earthquake shook the town and caused widespread damage.
Although there were no deaths, several people were injured, and several of the largest and oldest
commercial buildings suffered significant cracking and settlement. Many buildings were built of

unreinforced masonry, and a few had obvious cracks. Immediate structural inspection was

essential before authorities could allow people to re-enter the buildings to live and work.

The Town Administrator asked Engineer A to undertake a contract for immediate structural

inspection of the damaged buildings. Engineer A declined. He explained that his wife owned

four of the buildings requiring inspection, and it would be a clear conflict of interest if he were to

inspect his wife’s property. The Town Engineer asked whether Engineer A would skip her

property and just inspect the buildings owned by others. Engineer A again declined, saying that

if he condemned any of the buildings, he would still have a perceived conflict of interest, since

his wife was in competition with other owners for tenants. Moreover, in this crisis he should

assist his wife to rehabilitate her buildings and could not place her behind other owners in a

similar situation.

The Town Administrator stressed the emergency nature of the situation. He pointed out that

outside help was unavailable because of poor road conditions and also because other engineers

were busy, dealing with other communities that were similarly affected.

Question: Does Engineer A have a conflict of interest? What should he do?

Outcome: Engineer A agreed to do the work and, indeed, found he had to condemn two of his

wife’s buildings and five others. An aftershock that occurred a few days later damaged all seven

of these buildings, thus confirming his judgments.

Authors’ Comments: Engineer A behaved correctly and honourably by trying to avoid an

assignment that would put him into a conflict of interest; however, when the Town Administrator

advised him that other engineers were unavailable during a time of crisis, Engineer A put the

public welfare first, as required by every Code of Ethics. Having disclosed his conflict of

interest, he undertook the work.

Engineers and geoscientists can usually avoid a conflict of interest simply by refusing an

assignment or by withdrawing if a conflict of interest arises. In this case, Engineer A could not

avoid the conflict of interest, but promptly disclosed it. When a conflict of interest is created by unavoidable circumstances, disclosing it is usually an adequate action on the part of the

professional. By disclosing an unavoidable conflict of interest, the engineer or geoscientist

invites scrutiny, so that others can satisfy themselves that the work is proceeding objectively and

honestly.

F-9: Conflict of Interest in Curb & Gutter Project

 Statement of the Case: Engineer A was a civil engineer in one of four private practices in a

medium-sized town in a rural area of the province. A nearby village awarded her a design

contract for several kilometres of curb and gutter on the main street, including extension of the

existing storm sewer. The contract involved four stages: designing the modifications, preparing

construction specifications, evaluating the contractors’ bids, and providing field inspection

services during the construction. Engineer A undertook the design and prepared the contract

documents.

Statement of the Case: Engineer A was a civil engineer in one of four private practices in a

medium-sized town in a rural area of the province. A nearby village awarded her a design

contract for several kilometres of curb and gutter on the main street, including extension of the

existing storm sewer. The contract involved four stages: designing the modifications, preparing

construction specifications, evaluating the contractors’ bids, and providing field inspection

services during the construction. Engineer A undertook the design and prepared the contract

documents.

Questions: Did Engineer A have a conflict of interest in this case? Was her conduct

professional?

Outcome: The Clerk asked the mayor to convene a meeting of the Village Council. The Council

found the process was irregular, but agreed to it (after some debate). Engineer B was hired to

review the bids. Engineer A’s construction company was the successful bidder, and the company

proceeded to construct the curb, gutters, and sewer extension that Engineer A had, herself,

designed. Engineer B provided the field inspection services during the construction. Engineer A

received no further design or construction contracts from the village.

Authors’ Comments: A client typically hires the consulting engineer to design the project and

to monitor the construction by an independent contractor. This usually creates a three-way

relationship between the client (owner), the consultant (engineer), and the contractor (builder).

The client needs the unbiased advice of the consultant to ensure that the work of the contractor is

adequate. In this case, Engineer A first became the consultant, but at the midpoint of her

contract, she switched to being the contractor.

Although her conduct was unprofessional, the facts (as presented here) likely would not qualify

as misconduct. Engineer A created the appearance of a conflict of interest by having her

construction company bid on the work she had, herself, designed. A devious person writing

specifications could easily provide a small advantage to a specific contractor, thus putting other

bidders at a disadvantage. Fortunately, she revealed her financial interest in the construction

company and did not compound her error by remaining silent. Disclosing a conflict of interest

reduces the ethical problems, but it is better to avoid the conflict of interest in the first place

Conversely, if Engineer A had concealed her interest in the construction company and had

served as inspector for the work produced by her own company, she would certainly be subject

to disciplinary action for concealing a serious conflict of interest.

Engineer A could have avoided the conflict by picking either the design consultancy or the

construction. She should have known whether her construction company would want to bid on

the project, and she should have decided which was the best business decision, and picked one or

the other, but not both. By picking both (in sequence), after she herself had prepared the

specifications, she opened herself to criticism for conflict of interest. In fact, a perceived conflict

of interest would likely remain in the public’s mind and might perhaps explain why she received

no further contracts from the village.

Although this case ended without a dispute, Engineer A failed to fulfill the terms of the original

contract. The Village Council would be entitled to claim from her any additional costs resulting

from the breach of contract. (Presumably, additional costs were involved when Engineer B was

hired.)

A Related Note: Nothing prevents businesses from vertical integration or “design-build”

contracts. Conflict arises when the client expects the consultant (designer) and the contractor

(builder) to be at “arm’s-length,” but they are not. In a design-build agreement, for example, the

contractor negotiates (or bids on) a contract with the owner, which requires the contractor to

carry out a design and then build to that design—all in one contract. Where there is one

competition for one contract, there is no conflict. In design-build arrangements, the client might

engage a second consultant to monitor the work of the contractor and give impartial advice.

Explanation:

This paragraph is making a nuanced ethics distinction:
👉 Something can be wrong (unprofessional), but still not serious enough to be formal misconduct.

Let’s unpack it clearly.

---

1) “Unprofessional” vs “Misconduct”

• Unprofessional conduct = poor judgment, bad practice

• Misconduct = serious breach that can lead to discipline

👉 Here, Engineer A’s behavior is questionable, but not severe enough (based on the given facts) to trigger discipline.

---

2) What Engineer A did wrong

She:

• Designed a project

• Then had her own construction company bid on it

👉 This creates a conflict of interest (or at least the appearance of one)

---

3) Why this is a problem

Even if she acted fairly, the risk is:

• She could write specifications in a way that subtly favors her company

• Other bidders could be unfairly disadvantaged

The key issue is not proven cheating —
it’s that the situation makes bias possible and believable

---

4) “Appearance of conflict of interest”

This is very important in ethics.

👉 Even if no wrongdoing occurs:

• If it looks suspicious → it undermines trust

Engineers must avoid not only:

• Actual conflicts
  but also

• Perceived conflicts

---

5) What she did right

She disclosed her financial interest

That means:

• She did not hide the conflict

• Others were aware and could judge accordingly

👉 This is why it likely does NOT rise to misconduct

---

6) Why disclosure is not enough

The paragraph emphasizes:

“Disclosing reduces the ethical problem, but avoiding it is better”

Because:

• Disclosure = transparency

• But the risk of bias still exists

---

7) Ethical principle

Under standards like Professional Engineers Ontario:

Engineers must:

• Avoid conflicts of interest where possible

• Fully disclose them if unavoidable

👉 Best practice = avoid + disclose
👉 Minimum acceptable = at least disclose

---

8) Simple interpretation

Engineer A put herself in a questionable situation (designing and bidding),
but because she was transparent about it, it’s considered poor judgment—not serious misconduct.

---

9) Exam insight (very important)

This is a classic NPPE pattern:

Situation	Outcome
Conflict + hidden	❌ Misconduct
Conflict + disclosed	⚠️ Unprofessional but acceptable
No conflict	✅ Ideal

---

Bottom line

• She shouldn’t have created the conflict

• But since she openly disclosed it, she avoided crossing into disciplinary misconduct

-------------------------------------

Explain: Arm's Length: “Arm’s length” means a relationship where the parties are independent, impartial, and not influenced by personal or financial ties.

---

Simple definition

An arm’s length relationship = no close connection, no hidden interest, no bias.

---

In engineering ethics

An engineer must act at arm’s length when:

• Making decisions

• Awarding contracts

• Providing professional opinions

👉 This ensures fairness and objectivity

For example, under Professional Engineers Ontario expectations:

• Engineers must avoid situations where their judgment could be influenced by self-interest or relationships

---

Example

✔️ Arm’s length

• You design a project

• An unrelated contractor bids on it

• You evaluate fairly

👉 No personal connection → objective

---

❌ Not arm’s length

• You design a project

• Your own company (or friend’s company) bids

👉 Now your judgment may be biased → conflict of interest

---

Why it matters

If a situation is not at arm’s length:

• It can create conflict of interest

• It may be seen as unfair or unethical

• It can undermine public trust

---

In plain terms

“Arm’s length” means keeping a professional distance so your decisions stay fair and unbiased.

---

Exam shortcut (NPPE)

If you see:

• Family, own company, financial interest
  👉 Not arm’s length → potential conflict

If you see:

• Independent parties
  👉 Arm’s length → acceptable

F-12: Maintaining Confidentiality

Statement of the Case: Engineer A was hired as an electrical engineer by Company B, a small
manufacturer of control systems for heavy lifting equipment used by loggers and contractors.
The total market consisted of about 200 logging firms, and the company had about a quarter of that market. That is, about 50 of the logging firms used the control system and were repeat
customers, providing about 90 percent of Company B’s sales volume. The control system was
not patented. Although the device was patentable, Company B’s owner had decided to keep the concept secret, and all employees, including Engineer A, signed trade secret documents, agreeing that they would not disclose or otherwise duplicate, use, or sell the concept.

Explanation: This paragraph is setting up a confidentiality / trade secret ethics case. Let’s break it down in a structured way.

---

1) Who is involved

• Engineer A → employee (electrical engineer)

• Company B → small manufacturer of control systems

• Customers → logging firms (about 200 total in the market)

---

2) Business context (important for understanding risk)

• Company B has:

  • ~25% market share (≈ 50 firms)

  • These customers generate ~90% of its revenue

👉 This means:

• The company is highly dependent on a small client base

• Losing competitive advantage could seriously harm the business

---

3) The key technical asset

• The control system:

  • Not patented

  • But could have been patented

Instead, the owner chose:

Trade secret protection

---

4) What is a trade secret?

A trade secret is:

• Valuable technical/business knowledge

• Kept confidential instead of publicly disclosed (like a patent would be)

👉 Examples:

• Design methods

• Algorithms

• Manufacturing techniques

---

5) Why NOT patent it?

If patented:

• The design becomes publicly disclosed

• Others can study it (but can’t legally copy for a period)

If kept as a trade secret:

• No public disclosure

• Protection depends on keeping it confidential

👉 So secrecy = survival

---

6) Engineer A’s obligation

All employees (including Engineer A):

• Signed trade secret agreements

That means they agreed:

• ❌ Not to disclose the concept

• ❌ Not to copy or reuse it elsewhere

• ❌ Not to sell or transfer the idea

👉 This is both:

• A legal obligation

• An ethical obligation

---

7) Why this matters ethically

Under professional standards (e.g., Professional Engineers Ontario):

Engineers must:

• Protect confidential information

• Act with loyalty to their employer/client

• Not misuse proprietary knowledge

---

8) What the paragraph is really setting up

This is a classic ethics scenario setup:

👉 Likely upcoming issue:

• Engineer A may later:

  • Leave the company

  • Use the design elsewhere

  • Disclose the secret

And the question will be:

Is that ethical?

---

9) Simple interpretation

Company B relies heavily on a secret design for its business, and Engineer A has legally and ethically agreed to keep that design confidential.

---

10) Exam insight (very important)

When you see:

• “Not patented” + “trade secret agreement”
  👉 Immediate flags:

• Confidentiality duty is VERY strong

• Misuse = likely misconduct

------------------------------------------------------------------------------------

After about three years as an employee, Engineer A resigned from Company B to set up her own firm. She designed a more advanced control device, improving upon the concept invented by Company B. To sell her device, Engineer A contacted Company B’s 50 key repeat customers to get them to switch allegiance to her new firm and to her improved product. Company B sued Engineer A in civil court for breach of the confidentiality agreement, and won the case. In her defence, Engineer A stated that, during her employment at Company B, she became aware of  flaws in the original device and her improved device overcame those flaws. Testimony

confirmed that she had never told colleagues at Company B that she was aware of such flaws,

nor did she suggest improvements to the device while employed there. After the civil court

judgment, the owner of Company B asked the provincial Association to discipline Engineer A

for unprofessional conduct.

Question: Is Engineer A guilty of professional misconduct?

Authors’ Comments: Since Engineer A was found liable in civil court, the ruling tends to

confirm the facts of the case. Engineer A did not act as a faithful employee of Company B. She

was apparently aware of flaws in the control device, but rather than use this knowledge for the

benefit of her employer, she used it, and the company’s trade secrets, to her own advantage. She even used Company B’s proprietary list of regular customers to advance her personal welfare.

Such self-serving behaviour is contrary to the Code of Ethics and constitutes professional

misconduct. The Association, almost certainly, would pursue disciplinary action.