By Leslie King O’Neal
Dispute Review Boards Provide On-Site Dispute Resolution
It’s rare to have a construction project with no disputes. Dispute review boards provide a method for prompt, informal, cost-effective and impartial dispute resolution on the jobsite.[i] In the United States DRB’s have been used for over 30 years to avoid and resolve disputes during the project, primarily on projects such as dams, tunnels and water management plants.
Deborah Mastin Shares Her DRB Experiences
Last week Deborah Mastin, [ii]well-known ADR professional (and a long-time friend of mine), and I presented on ADR to the Florida Bar Construction Certification Review Class. Deb shared her extensive experience with Dispute Review Boards and their benefits especially on major projects. This post is based on Deb’s materials and presentation.
What is a Dispute Review Board (“DRB”)?
It’s a three member group of skilled, impartial industry professionals that both parties select who: (a) visit the jobsite and meet with the project team regularly to facilitate job progress; (b) help avoid or mitigate impacts of unplanned events; (c) help resolve disputes in real time, at the project level before claims arise; (d) if needed, issue recommendations or decisions.
Why Use a DRB?
DRB’s prevent project disputes from aggregating or compounding. In my experience, construction claims aren’t like fine wine—they don’t improve with age! DRB’s help reduce or prevent acrimony between project teams that can occur with unresolved disputes. They allow project team members to focus on their job responsibilities (getting the project built!). DRB’s validate project team’s decisions to compromise to resolve claims and they can lower process cost dramatically.
DRB Objectives
A DRB’s main objective is to avoid or prevent project disputes. If disputes occur, the DRB seeks to mitigate them through facilitation and communication. DRB’s are NOT technical advisors. Also, the DRB process is NOT mediation—ex parte communications with DRB members are not allowed.
What Types of Projects Benefit from DRB’s?
DRB’s are especially suited for complex, time sensitive, long-term projects. They are often used on transportation projects such as tunnels, roads, bridges, ports, dams and transit projects. They’re also well suited for airports, hospitals, power plants, water and waste water treatment plants and university campuses.[iii] However, they can also be used on smaller projects.
How to Establish a DRB
Typically, the contract specification or a local regulation or procedure creates the dispute board. For example, the Florida Dept. of Transportation (FDOT) Contract Special Provisions provide for establishment of a DRB.[iv] The specification should outline the DRB’s purpose, how members are selected, its relationship to project activities, hearing procedures and parties’ options after DRB decisions. Some form contracts contain provisions for DRB establishment and some ADR providers have special DRB rules.[v]
Selecting DRB Members
After DRB establishment, the next steps are member selection and engagement (each panel member has a separate contract). The engagement contract establishes the members’ scope of services, responsibilities, fees and release of liability.
DRB members must have appropriate experience (engineers, contractors, construction lawyers), follow ethical standards, such as disclosing relationships with parties) and be neutral and unbiased. In addition to being available and interested, they should have mediation and arbitration skills and be trained in dispute board practice.
The DRB Process
Successful DRB’s have monthly meetings (in person or virtual) to which all project stakeholders are invited. It’s at these confidential meetings where the DRB’s provide the most value. The project team can discuss the schedule and potential disruptions and review outstanding RFI’s and claim logs. The DRB can provide informal guidance –before significant costs are incurred.
If either party requests (after prior discussion at regular meeting) DRB’s can hold “formal” proceedings, which can result in non-binding recommendations or a binding written decision. The proceedings can be de novo or based on the record. They are oral, with no swearing of witnesses or cross-examination, although DRB members may ask questions. The DRB issues a reasoned decision. The decisions can be admissible (or not) in subsequent arbitration or litigation. The DRB process is flexible and can meet the parties’ specific needs.
DRB Success Stories
Since 1993, the University of Washington has used dispute boards on over 40 contracts with a total value over $4 Billion. They had only 2 formal hearings in 20 years. In Florida, the Arsht Center of Performing Arts in Miami and the Miami International Airport North Terminal Development Project used DRB’s successfully.
What Do DRB’s Cost?
The Miami International Airport DRB cost $2,000/person per day. The total cost was $75,000 per year. This is a fraction of the cost of mediating, arbitrating or litigating a claim. For smaller projects, costs can be reduced by having a smaller board (only one local member) and shorter meetings (1/2 day or less). Even on smaller projects, monthly meetings are the best practice for a successful DRB.
DRB Takeaways
- Get buy-in from all stakeholders
- Pick good panel members
- Start meetings and site visits early in the project
- Don’t cancel or postpone meetings
- Don’t wait for a dispute to arise
- Be pro-active—stay ahead of the game
Dispute Review Board Reference Materials
- Dispute Resolution Board Foundation: https://www.drb.org
- Carl Menassa, Feniosky Pena Mora, Analysis of Dispute Review Boards Application in U.S. Construction Projects from 1975 to 2007, 26 Journal of Management in Engineering March 17, 2009) (https://doi.or/10.1061/(ASCEIME1943-5479 000000)
[i] Peter H. J. Chapman, Dispute Boards, FIDIC|International Federation of Consulting Engineers (https://www.fidic.org).
[ii] Deborah Bovarnick Mastin http://linkedin.com/in/deborahmastin
[iii] Many project owners use DRB’s, such as: FDOT, Broward Aviation Dept., Miami-Dade Aviation Dept., Caltrans, Big Dig, NY MTA, BART, DART, Panama Canal, World Bank, London Olympics, Rio Olympics.
[iv] https://fdotwww.blob.core.windows.net; FDOT provides guidelines for selecting DRB members and the engagement agreement.
[v] See ConsensusDocs 200.4 addendum for DRB (consensusdocs.org); AAA has Dispute Resolution Board Hearing Rules and Procedures (https://adr.org/sites/default/files/AAA_Dispute_Resolution_Board_Operating _Procedures.pdf); the International Centre for ADR (ICC) has Dispute Board Rules (https://acerislaw.com)
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