Вы находитесь на странице: 1из 16

Disputes Review Board

Disputes Review Board : Introduction


In year 1952, the concept of dispute review board (DRB) was initiated in the
construction of Central Artery/Tunnel in Boston (Harmon, 2009). The implementation is a
success by means of the usage of DRB in most tunnel construction thereafter. Surprisingly,
DRB concept achieved a track record for itself between the year 1975 and 1985 and the year
after. That is the nature of DRB change itself from the original intended tunnelling project
towards other major heavy civil engineering construction (McKillop, 2003]. This change
marks the evolution of the DRB.
Research has been conducted in searching for the credibility of DRB and the first ever
manual was published in year 1996 being title as Construction Dispute Review Board
Manual. In the same year, a non-profit organization called as the Dispute Resolution Board
Foundation (DRBF) was established to promote the usage of DRB worldwide and to boost
the confidence in adopting DRB. In year 2007, DRBF published their own Dispute Review
Board Manual which can be seen as the advanced version of the first manual published.
In recent years, DRB were virtually implemented in every construction areas such as
bridges, airports, building cogeneration plants, roadways and etc. in many countries such as
United States, Great Britain, Australia, Bangladesh, Pakistan, Vietnam, China and India
(Harmon, 2009). Generally, the context, nature and size of the dispute will influence the
choice of specialist chosen to act for the claimant or respondent and, very probably, the
choice of the method of dispute resolution (Turner, 1999).

Disputes Review Board


In Malaysia, contractual parties are often faced with three kinds of dispute resolution
methods (Sundra Rajoo, 2009):
1. Litigation (Formal way as in court)
2. Arbitration (Less rigid procedure but resemble to court)
3. Alternative Dispute Resolution (Informal, Third parties involvement)
DRB are yet to be utilized in the Malaysian construction industry (Fenn, Davies and
OShea, 1998). It requires DRB members who are selected for their knowledge and technical
expertise in that particular type of project to be constructed and for the employer and
contractor to have complete confidence in the impartiality of the DRB.
Dispute resolution generally refers to one of several different processes used
to resolve

disputes between

parties,

including

negotiation,

mediation,

arbitration,

collaborative law, and litigation.


One of the most important elements in the effectiveness of a dispute resolution system
is to institute the system at the very beginning of the project and incorporate it into the basic
contract documents. Without prior agreement on a process for dealing with problems and
disputes, it can be difficult, after a disagreement has developed, to get parties to come to
agreement on a method of dispute resolution.
Prior to that, one must have sufficient knowledge on each and every dispute resolution
method available. Thus, the objectives of the study are identifies as: (1) to understand and
explain the concept of DRB ; (2) to determine the practicability of DRB; and (3) to identify
the barriers in implementation of DRB.

Disputes Review Board


The research would render useful information and guide regarding DRB. It could
enhance the project stakeholders awareness and knowledge of the DRB particularly for its
effectiveness as a prevention method from escalating to a higher or more protracted level of
resolutions like arbitration and litigation.
Dispute Review Board is a board of impartial professionals formed at the beginning
of the project to follow construction progress, encourage dispute avoidance, and assist in the
resolution of disputes for the duration of the project. It is a unique, proactive, no adversarial
project management technique utilized during the course of construction to help the
contractual parties in dealing with the conflicts and solving any disputes arise thereon
(Harmon, 2003). DRB was form usually in a three person board from a trusted independent
construction equipped with the experienced and appropriate technical background to address
prevention and resolution of disputes (Pena-Mora, Sosa and Mccone, 2003).
A DRB is typically comprised of a single person, or a panel of three or five members
as required (McKillop, 2003). The purpose to keep the odd number is to achieve a majority
decision in case of any decision could not be reached. The member are selected in such
manner that one of the member appointed by the employer and approved by the contractor,
the second member appointed by the contractor and approved by the employer, and a third
member selected by the first two members and approved by both the employer and contractor
(Corgan, Kelleher and Dorris, 2002). The third member usually serves as the chairperson.
Although members are selected each by both contractor and employer, it should be strongly
emphasized that this does not implied that the members are employed to provide their
services and stand towards their respective owner. They are so selected to implement fairness
into the contract so that initially, faith was there.

Disputes Review Board


In typical construction contracts, the parties approach the project consultant to make a
decision regarding the contractual obligations of the respective parties. As the project
consultant is an agent of the owner, the initial review process may be perceived as biased and
dependent solely on the expertise of a party chosen by the owner.
In contrast, Dispute Review Boards (DRBs) provide opinions which are independent
of party interest. DRBs have come to play an increasingly important role in large and
complex construction projects, both in Canada and internationally. Projects that have
involved DRBs in recent years include the $15 billion Hong Kong airport, as well as in the
comparatively smaller $8 million Twin Falls Project in Idaho. Here in Canada, DRBs were
integrated into the contracts underlying the $1 billion expansion of Torontos Sheppard
Subway line.
While DRBs can range from 1-5 board members, most often, a DRB will consist of 3
members, with each party to the contract selecting one member who must be approved by the
other party. 2 The selected and approved members will then choose a third member
collectively to act as the Chair of the DRB.
The jurisdiction and role of the DRB can be varied in the contract on a case-by-case
basis. However, DRBs are typically called upon to issue a non-binding opinion whenever
there is a claim by one party that cannot be resolved with the other. In some cases, the board
may intervene on its own, without the parties consent.
While some believed that the existence of the DRB would actually lead to additional
disputes, in practice, just the opposite occurred. 3 The use of DRBs seems to have the effect
of reducing the number of disputes by pressuring the parties to resolve the dispute amongst
themselves without bringing it before the DRB. This may be because members of the DRB
are often professionals with a great deal of experience in the type of project underway and
4

Disputes Review Board


interpretation of construction contracts. It has been observed that contractors are less
likely to present exaggerated claims for the sake of increasing pressure on the
owner/employer, and owners/employers are less likely to reject meritorious claims. Stated
differently, both sided have a vested interest in preserving their credibility, which may suffer
if they misbehave while the teacher is in the room.
The use of a DRB becomes slightly more complicated in the event that a claim,
having previously been decided by the DRB, proceeds to litigation or arbitration. There is no
clear answer as to whether the opinions of the DRB should be admissible at trial or
arbitration.
The reported success rate of dispute resolution through DRBs is high. As of 2007 over
1,000 projects in North America used a DRB, and in 98.7% of those projects there was no
arbitration or litigation.
Nonetheless, while much of the literature on DRBs highlights their cost-effectiveness
and high success rate, there are several important critiques of the DRB process to be made.
First, the strength of the decisions of the DRB depends heavily upon the credibility,
knowledge and expertise of DRB members. These factors are variable, which means that the
strength and credibility of the Boards decisions is contingent upon the makeup of the group.
However, this is true of any dispute resolution process and is not unique to DRBs.
Second, the DRB resolution process does not rely on the rules of legal procedure. The
absence of procedural protections may, in turn, result in a lack of confidence in the Boards
decisions.
Third, and relatedly, lawyers generally do not sit as members of DRBs. This can be
viewed meritoriously by the industry as decisions are made by construction professionals
alone. However, the fact that DRBs typically do not include legal professionals may detract
5

Disputes Review Board


from the strength of any decision that is heavily based in law, or in the interpretation of a
contract.
These critiques are important, not only because of the counter-perspective they offer
to the dominant, widespread praise of DRBs, but also because they give insight into
safeguards and additional precautions that might be adopted by the parties to enhance the
efficacy of DRBs.
Parties to a project wishing to engage with DRBs should select highly qualified,
capable board members. Parties can solicit board members through an advertised request for
qualifications, and may also conduct personal interviews.10 Board members should also be
kept abreast of project developments by way of periodic site visits, and the sharing of
progress reports and meeting minutes.
The absence of procedural protections is more difficult to remedy. Nonetheless, this
shortcoming is, in some sense, also one of the strengths of DRBs: it is the informality of the
DRB process that makes it more cost-effective than litigation. Furthermore, DRBs exist as a
function of the contract between parties. As such, the contract can contain provisions that
mandate certain procedural rules and can similarly require that a DRB member be a lawyer,
arbitrator, or other legal professional, thereby mitigating many of the potential dangers posed
by the current DRB system.
There certainly seem to be downsides to DRBs, at least in the form that they often
exist at present. However, DRBs exist as a function purely of the contract between parties. As
such, the contract can contain provisions that mandate certain procedural rules and can
similarly require that a DRB member be a lawyer, arbitrator, or other legal professional,
thereby mitigating many of the potential dangers posed by the current DRB system.

Disputes Review Board


DRBs continue to be an asset to parties wishing to advance their construction projects while
mitigating disputes as they arise.
There was an early concern that the ready availability of a DRB would attract disputes, but
in practice, just the opposite has occurred (Hinchey & Haris, 1999):

. . . (T)he existence of the DRB seems to have had a dampening effect on


controversies by, in effect, giving the parties an incentive to resolve disputes among
themselves, rather than suffer the inconvenience, disruption, and possible
embarrassment of having to call in the DRB. According to virtually all surveys and
commentary, party satisfaction with DRBs is high. Those who have used the process
on one project tend to use it repeatedly. The high level of satisfaction is usually
attributed to the real time resolution of the dispute, while all involved parties are
available and the job can continue to move forward.

Furthermore:

. . . contractors are less likely to present exaggerated claims for the sake of
increasing pressure on the owner/employer, and owners/employers are less likely to
reject meritorious claims. Stated differently, both sides have a vested interest in
preserving their credibility, which may suffer if they misbehave while the teacher is
in the room.

Disputes Review Board


DISPUTES REVIEW BOARD CASE: THE TORONTO SHEPPARD SUBWAY TWIN
TUNNELS PROJECT

The City of Toronto's Yonge Street subway line, the first of its kind in Canada, opened
in 1954. And on January 1 of that year, the Toronto Transit Commission (the TTC), an
agency of the City of Toronto, became the sole provider of public transportation services in
the city. Over the years, new subway extensions, branches and lines extended the reach of
the city to the growing suburban populations.
The Sheppard Subway line, which took 8 years to build, and which cost almost $1
billion, opened on November 22, 2002. It was the first subway line in Canada whose two
separate subway tunnels (the Twin Tunnels) were built entirely by two tunnel boring
machines (TBMs). The TBMs (nicknamed Rock and Roll) not only dug through the
earth, but also installed reinforced concrete liner rings as they passed. The Twin Tunnels
were approximately 2.7 miles in total length, were to run side by side, approximately 40 feet
apart, and were generally located from approximately 15 to 85 feet below the surface of
Sheppard Avenue East.
TTC had entered into a CDN $93 million tunnelling contract with MPF, a joint
venture consisting McNally International Inc., PCL Constructors Eastern Inc., and The
Foundation Company Inc. (subsequently known as Aecon Construction Group Inc.). The
Twin Tunnels contract established, and set out the procedure, function and key features of, a
Dispute Review Board. The DRBs stated purpose was to assist in the resolution of claims
and other disputes arising out of the performance of the work on the Twin Tunnels project, in
an independent, fair and impartial manner, in order to avoid construction delay and litigation.

Disputes Review Board


The mandate of the DRB included the provision of written recommendations to the
parties in order to assist in the resolution of such disputes. However, although not binding on
either party, the recommendations of the Disputes Review Board should carry great weight
for both the Commission [TTC] and the Contractor [MPF].
According to the Twin Tunnels contract, the DRB was to consist of one member
selected by TTC and approved by MPF, a second member selected by MPF and approved by
TTC, and a third member selected by the first two members and approved by both TTC and
MPF. The third member was to act as Chair for all DRB activities. The contract also
provided that (i)t is desirable that all Disputes Review Board members be experienced with
the type of construction involved in this Twin Tunnels Project, and interpretation of contract
documents. The goal in selecting the third member is to complement the construction
experience of the first two and to provide leadership for the Boards activities.
The DRB member selected by TTC and approved by MPF was a well-respected
engineer who was President of a consulting company, and who had substantial underground
and mass transit project experience and expertise.
The DRB member selected by MPF and approved by TTC was a registered civil,
geotechnical and safety engineer, and a Professor of Civil Engineering at Stanford University,
who had experience as an expert witness in cases involving geotechnical, contractual or
construction practice issues, and who had served both as Chair and as a member of numerous
other dispute review boards.

The DRB member selected by the two appointed members of the DRB as Chair of the
DRB, and approved by both TTC and MPF, was an engineering consultant with substantial
9

Disputes Review Board


experience managing large tunnelling and other underground construction contracts, who had
considerable experience chairing numerous other dispute review boards relating to tunnelling,
subway and other construction and infrastructure projects.
Within a short time after commencing its tunnelling work, MPF gave notice to TTC
that it was incurring additional cost as a result of muck disposal problems due to high foam
usage. MPF alleged that the actual quantity of foam that it was required to use in order to
successfully excavate the tunnels far exceeded both what it expected to use and what it could
have reasonably been expected to use. MPF contended that, as a result of the high foam
usage, its tunnel spoil was reduced to such a high-slump condition that its disposal costs were
significantly increased. MPF alleged that both it and its trucking subcontractor were forced
to haul the excavated and conditioned tunnel muck to inconvenient and expensive disposal
sites, all at costs far beyond what MPF had included in its bid.
Subsequently, MPF submitted its 369-page claim for CDN $4.4 million in additional
costs associated with tunnel spoil disposal. TTC quickly responded that there was no valid
basis for the claim, and, after preliminary settlement discussions, the parties agreed to bring
the matter before the DRB for a formal hearing.
Both TTC and MPF were given the opportunity to make written pre-hearing
submissions, to present both factual and expert evidence, to make further submissions at the
2-day hearing, and to make written post-hearing submissions.

Shortly thereafter, the DRB released its detailed and comprehensive 41-page written
Recommendation. The three members of the panel, in unanimously rejecting MPFs claim,

10

Disputes Review Board


stated that MPF has not made a reasonable case for extra compensation based upon
arguments that lay within the four corners of the contract.
Presumably of the view that success lay just outside the four corners of the contract,
MPF provided written notification to TTC of its rejection of the DRBs Recommendation (in
accordance with the contract), and commenced litigation proceedings.
The facts, issues, pleadings, and submissions in the ensuing litigation were virtually
identical to those which were put before the DRB. However, in its Statement of Claim, MPF
made no reference whatsoever to the hearing before, or to the Recommendation of, the DRB.
So TTC, in its Statement of Defence, pleaded that (t)he claim being asserted by MPF against
TTC in this litigation is precisely the same claim that was submitted by MPF and TTC to the
DRB for hearing more than 2 years ago. MPF might have, but neglected to, put forward a
reply to the effect that the entire DRB process was non- binding and akin to mediation, and
was therefore privileged as being in the nature of settlement communications.
TTC also pleaded that the commencement of this litigation gave rise to the risk of the
court making a decision that would be inconsistent with the decision made 2 years earlier
by the panel of three eminently qualified and experienced experts comprising the DRB; and
that inconsistent decisions would bring the alternative dispute resolution and DRB processes
into disrepute.

Furthermore, TTC pleaded that, as a matter of public policy, the commencement of


litigation, after the same claim was unanimously and unequivocally rejected previously by a
DRB, created a precedent that only served to discredit the benefits of the partnering, dispute
resolution and DRB concepts and processes, and to discourage other parties on other projects
11

Disputes Review Board


from attempting to resolve their disputes using those concepts and processes instead of
litigation.

COMMENTARY AND CONCLUSION

12

Disputes Review Board


DRBs offer a non-binding method of dispute avoidance that attempts to provide a
'release valve' for contractual tension to prevent disputes erupting altogether combined with
persuasive recommendations for their resolution if they do.
Dispute Review Boards are made up of typically one or three experts who can assist
in the management of conflicts and disputes in longer term and large projects.
Typically, the DRB is established shortly after execution of the contract documents, as
performance of work on the project begins.
A DRB has two basic responsibilities. The first is to become familiar with the project
during construction. This process begins with the Boards review of the plans and
specifications, followed by periodic visits to the project.
The DRBs second major responsibility is conducting hearings on any disputes
referred to it. At a hearing, which usually is held at the construction site, owner and
contractor representatives who have first-hand knowledge of the issues are given the
opportunity to present facts, documents, and the rationale in support of their respective
positions. Formal recording of the hearing and participation by lawyers are both relatively
rare. Following the hearing the DRB issues a written recommendation or a decision, setting
forth its analysis and opinion. If one or both parties elect to reject the recommendation, the
issue proceeds to the next stage of dispute resolution under the terms of their agreement.
The presence of a DRB can circumvent the negative attitudes and posturing by both
parties that occur when disputes linger for years and when attorneys, either in-house or
outside counsel, are actively involved in the dispute process.
The litigation settled before trial. You have a pretty good case, Mr. Pitkin. How much
justice can you afford ?

13

Disputes Review Board

REFERENCES

14

Disputes Review Board


A. McKillop, Dispute Review Boards Help Settle Disputes During Construction, AACE
International, 2003, 11.1-11.4.

B. G. Corgan, T. J. Kelleher and E. Dorris, Construction Disputes: Practice Guide with Forms
2nd edition. New York: Aspen Publisher, 2002

C. C. Menassa, and F. Pena-Mora, Analysis of Dispute Review Boards Application in U.S.


Construction Projects from 1975 to 2007, Journal of Management in Engineering,
Vol. 26, 2010, pp. 65-77.

D. F. Turner and A. Turner, Building Contract Claims and Disputes 2nd Edition. Singapore:
Longman, 1999

DRRF,

DRBF

Practices

and

Procedures,

2007.

Retrieved

from

http://www.drb.org/manual_access.htm
K. M. J. Harmon, K., Dispute Review Board: Elements of a Convincing Recommendation,
Professional Issues in Engineering Education and Practice, Vol. 130, 2004, pp. 289 295.

K. M. J. Harmon, Case Study as to the Effectiveness of Dispute Review Boards on the


Central Artery / Tunnel Project, Journal of Legal Affairs and Dispute Resolution in
Engineering and Construction(ASCE) , Vol. 1, 2009, pp.18-31

P. Fenn, E. Davies and M. OShea, Dispute Resolution and Conflict Management in


Construction: An Internatioinal Review (eds). London: E & FN Spon, 1998.
15

Disputes Review Board

S. Rajoo. Sundra Rajoo Trade Disputes Solving Mechanisms, 2009. Retrieved from http://
www.sundrarajoo.com/2009/10/trade-disputes-solvingmechanisms-poram-coursejuly-2009/
The institutes of Arbitrators & Mediators
https://www.iama.org.au/sites/default/files/resources/rules-guidelines/disputereview.pdf

DRBF Practices and Procedures Manual, Chapter 1, Section 3 (revised April 2007), pages 23 (at http://www.drb.org/manual/1.3_final_4-07.doc)

Duncan W. Glaholt, Reviewing Dispute Review Boards, 96 C.L.R. (3d) 167

Z.M. Matyas, A.A. Mathews, R.J. Smith, P.E. Sperry, Construction Dispute Review Board
Manual (N.Y.: McGraw Hill, 1995) at 30.

C. Chern, Chern on Dispute Review Boards (Oxford: Blackwell Publishing, 2008) at ps. 5964.
John W. Hinchey and Troy L. Harris, International Construction Arbitration Handbook
(Thomson/West, 2008), at para 1:10

Harvey

J.

Kirsh,

The

Ins

and

Outs

of

Dispute

Review

Boards,

http://www.glaholt.com/files/the_ins_and_outs_of_dispute_review_boards__paper_.pdf

16