What are the benefits of Dispute Review Boards?
For large, complex projects, DRBs can save enormous amounts of money and time. Disagreements are settled contemporaneous with the construction project, which allows the parties to free up time and resources and allows personnel to work on more productive things. The costs of pursuing court claims are avoided.

DRBs offer a forum for subcontractor complaints; many claims involve subcontractors, and DRBs are able to assign responsibility between the owner and primary contractor for those claims.

There are intangible benefits as well. The prospect of reporting to a board of experts shifts owners and contractors into a more proactive, preemptive disposition, which contributes to a more positive atmosphere at the job site. Both parties tend to want to appear cooperative and to hammer out problems before they reach the board level. Preparing for a review may uncover new or better information that can lead to settlement. When settlement cannot be reached, the DRB's recommendation diminishes the likelihood of hard feelings developing between contractors and owners.

Foremost, though, the goal of DRBs is the quick resolution of construction disputes so that construction jobs get completed faster and the parties can avoid adding their case to already clogged civil court dockets.

What is the timing of a Dispute Review Board?
To achieve the maximum benefit and cost savings the DRB is organized within the prime contract between the Owner and the Builder prior to construction beginning. See sample DRB contract clause.

A DRB can be started mid-project, as well, either knowing problems exist and disputes are coming or to head disputes off as an on site preventative system.

How is a Dispute Review Board started?
To start, call an MFC Dispute Resolution Specialist to discuss the size and complexity of your project and determine if a one or three member board is the best choice. Once the Board member(s) is/are selected and approved by the parties, the DRB is officially established when the parties and Board members(s) execute a mulit-party agreement.

How does a Dispute Review Board work?
The DRB and its procedures are organized before construction begins. See our Sample DRB Contract Clause. The contractor selects one member and the owner another (each must approve the other's choice); and a third is selected jointly by the two chosen board members. The costs of the review board are typically shared by all parties.

For small projects that may find the cost of supporting a DRB prohibitive, the one-person DRB is an option. Like the three-person panel, the single expert is chosen by owner and contractor and operates using the same principles and procedures.

Typically, the DRB receives copies of the contract documents, makes a project inspection tour, meets periodically at the site, and is kept informed of project developments. In the event a discrepancy occurs that the owner and contractor cannot settle on their own, the DRB will hear both sides of the argument at a meeting and produce a written recommendation for resolving the dispute. Although the decision is not binding, the parties usually defer to the judgment of the board; to do otherwise would defeat the purpose of having a DRB. The parties have had an opportunity to be heard, and they recognize that the DRB members have technical expertise and a firsthand understanding of the project.

How much will a Dispute Review Board cost?
The direct costs include the fees and expenses of the board member(s). The costs are shared equally between parties to avoid any perception of allegiance to either party. The parties should also consider the indirect costs of their employees' time in preparing for and participating in DRB meetings. However, the time is much less than involved in dispute resolution through arbitration or litigation.

The direct costs include document review, site visits, preparation time and hearings including time to deliberate and prepare the recommendation. For many projects the document review and site visits including informal recommendations and the value of having a dispute resolution process in place prevent all formal disputes. If a hearing is needed, the cost depends on the time required for review of the parties' pre-hearing documents, the hearing itself, and the time required for the DRB to deliberate and prepare the written recommendations(s) with supporting rationale.

For a small project, a Neutral Construction Expert can be brought in at any time, without a formal board, to hear an issue and give a recommendation or assist in a negotiated resolution. The project can keep moving and the dispute is resolved on-site before it can escalate into two opposing entrenched positions.

Please call MFC to speak with a Dispute Resolution Specialist who can help estimate a DRB cost range based on the size and complexity of your project.

What are the potential challenges to setting up a Dispute Review Board?
The biggest obstacle will be the relative newness of this concept. Although use of DRBs has spread quickly in the large project construction industry, owners and contractors who are unfamiliar with the concept may view the DRB as simply an added cost rather than a potential source of savings. Without appropriate training and information about the demonstrated value of DRBs, some owners and contractors may resist their use. Understanding is key to making the process work.

How is a Dispute Review Board different from Mediation or Arbitration?
A DRB can be thought of as an on-site neutral expert to help prevent and resolve disputes. A DRB reviews all the information available and then makes both informal and formal recommendations about how to proceed in the project to resolve the disputes.

A DRB does not use the mediation process of getting the parties to improve their communication and understanding with the goal of finding common ground and facilitate a mutually acceptable agreement. A DRB is more like an on-site non- binding arbitration panel in that they are the ones deciding how to resolve the solution and a DRB recommendation is non-binding.

How is a Dispute Review Board contract clause used?
By using a DRB contract cluase, the parties are pre-agreeing to use DRB in the event of a dispute. See Sample DRB Contract Clause.

How can I get more information about Dispute Review Boards?
MFC has a library of dispute resolution articles and other materials that are available on our website www.mfcbuild.com/resources and upon request.

We would be happy to furnish you with references.