A dispute review board (DRB) cannot guarantee elimination of post-project litigation, but when used properly, it can be an effective tool to prevent and resolve disputes rapidly during construction. Although DRBs were first and are most widely used on large civil and infrastructure projects, their benefits extend equally to major building projects (particularly hospitals) and industrial projects.

The modest out-of-pocket costs of a DRB can pay big dividends. DRBs offer the opportunity to shorten the life cycle of a dispute by requiring the principals to confront and address the merits of the dispute, rather than simply hunkering down and focusing on posturing and preparing for arbitration or litigation. Even when a DRB cannot immediately resolve a dispute, the process can still facilitate subsequent settlement and cost-effectively prepare both parties for formal adjudication. DRBs also can enhance communications and help parties resolve problems before they spiral into disputes.

DRB Specifications

The scope and authority of the DRB, as well as DRB procedures, are established in the construction contract, generally incorporated through the specifications and other attachments. It is important to review the DRB specifications on each project before submitting a bid or proposal. Although there is a fair amount of standardization, details may be customized that can have considerable practical, legal and risk implications.

The DRB Foundation and ConsensusDocs provide examples of standard DRB specifications. Some of the key details are the DRB member selection process, the scope of the DRB’s authority, who can directly participate in the DRB process and the impact of a DRB decision.

Regular Participation on the Project

Although focus is often placed on DRBs rendering formal decisions on disputes, the role of a board can and should be broader. Keep in mind, DRB members are most often experienced industry professionals or construction attorneys. They should be part of the communication structure of the project, with regular jobsite visits and meetings so the board members are generally aware of the nature and progress of the work and become familiar with the principals for the parties. The DRB should not be trotted out only when a problem has degenerated into a polarizing dispute that the board is asked to decide.

These regular site visits and meetings provide an informal and non-adversarial forum in which the principals are called on to identify and discuss potential problems before they become disputes. These group interactions with the DRB help enhance communication and preserve relationships between the parties as they address issues in a non-contentious setting. In this way, problems are more likely to be addressed and disputes are avoided, or at least mitigated, before moving down the trail to a formal disposition with a DRB hearing and decision.

Formal Hearings and Recommendations

When the DRB is asked to resolve a dispute by rendering a formal decision, the principals have less control than they do in bilateral negotiations. With the DRB, the dispute will be “judged” and a decision will be rendered.

Although that DRB decision is generally nonbinding, the process required to get to a decision can be tremendously valuable to both parties.

More often than not, the DRB recommendation leads directly or indirectly to the resolution of the dispute and avoidance of litigation or arbitration. The written submissions and hearings that are part of the process for the DRB to decide a dispute are more formal than the regular site visits and meetings, but far more informal than a court or arbitration proceeding.

Attorney participation in DRB hearings is a recurring issue and should be addressed in the specifications. Even in DRB hearings in which the parties make detailed and extensive presentations, it appears to be more effective to limit the presenters to project personnel.

Limiting attorney participation appears to lower adversarial tensions and reduce formality, and it allows the DRB and both parties to hear directly from firsthand participants.

There is no need to restrict a formal DRB hearing to multi-million-dollar claims. On the contrary, when a dispute on a recurring issue can be presented before the costs mount, it may be possible to have the DRB decide entitlement quickly on a single occurrence that provides guidance to the parties about how the DRB will view all the other similar occurrences. The parties may still disagree over the issue and the DRB recommendation, but with that guidance, they have the opportunity to react and adjust during construction rather than waiting until all the costs are incurred.

Impact of the DRB Recommendation

A DRB decision is generally called a recommendation—and it is just that. It is not binding on either party unless both parties accept the recommendation. It is not like an arbitration award that either party can unilaterally enforce.

An important consideration is whether the recommendation is admissible in a subsequent litigation or arbitration if the parties do not settle. The issue of the admissibility of the DRB recommendation must be addressed in the specification. Even if the DRB recommendation is not binding, a judge, jury or arbitrator will likely give a lot of weight to a detailed recommendation by three industry professionals who were selected by the parties and were familiar with the project.

Do Not Wait

If a contract calls for a DRB, do not wait for a dispute before activating the board. Once there is a serious dispute, it is tough to agree on anything. In addition, waiting eliminates the potential benefit of the DRB as a dispute avoidance tool.

That does not mean dump every problem on the DRB to solve. On the contrary, use the regular DRB site visits and meetings to enhance communication with the other side to help limit a lack of communication, misunderstanding or a party sticking its head in the sand.

When a formal DRB hearing and decision is sought, do not wait for the outcome before digging into the issue and investing serious effort into evaluating and supporting your position. At that point, it will be too late.

If an adverse DRB recommendation is issued, the board is unlikely to offer a “do-over,” especially if the problem was lack of preparation. The consequences of not properly preparing for a DRB hearing are compounded when the adverse recommendation is admissible in court or arbitration.

When properly understood and employed, DRBs are a tremendous benefit and value on any major project to help prevent, mitigate and resolve disputes in an expeditious and cost-effective manner.