For various reasons, disputes in the construction industry have become increasingly common. If they impact on time, productivity, and costs, they need to be processed quickly to keep the project on time and on budget. One approach that has evolved since its inception nearly 30 years ago is to use a Dispute Review Board (DRC). Founded in 1996, the Dispute Resolution Board Foundation (DRBF) brings together construction professionals from a wide range of industries. The organization publishes a newsletter with the latest information on the use of BRDs.2 Its records (dating from 1988) show that in 2002, 97.9% of disputes relating to contracts using BRGs could be resolved without litigation. Although the vast majority of projects included in this database concern civil infrastructure projects, their number increases for other types of construction. It is clear that DRBs can be extraordinarily successful in many situations. The use of a CRD at the end of construction to listen to a list of claims is little more than an informal and non-binding arbitration panel. Once again, all the unique advantages of DRB are lost and other problems arise from acidified relationships and firmly entrenched positions. In 1975, the Dispute Review Board procedure was first applied to the construction of the second tube of the Eisenhower Tunnel Project outside of Denver, Colorado.
With relatively few disputes that could be resolved quickly, the underground mining industry (underground mining, which at the time consisted mainly of the construction of mining tunnels) called the DRB process a success. DRBs have since become popular for all types of construction. The Dispute Review Board is usually composed of three impartial professionals who have experience in the particular nature of the proposed construction. Ideally, project participants agree in advance to seek the board`s assistance in preventing and resolving disputes during the construction project. Unlike arbitral awards, the recommendations of a DTA are generally not binding. However, a CRD is pretty much exactly what its name implies, that is, a group of people who settle disputes over construction projects. It can be from 1 to 3 people, although it is conceivable that a board can hold many more people. They are appointed before disputes arise – usually at the time of conclusion of the contract. Moreover, these people are usually not lawyers! Rather, they are experts in this field for each project for which they are used.
In a project where there is a CRD, an owner and the general contractor usually agree on who will work at the RDC. Sometimes both parties appoint a member, and then the couple appoints a third member. First, it should be noted that a dispute resolution board is not the absolute remedy for all disputes in the construction industry. Currently, DBBs are usually only used for large-scale projects. They have been particularly useful for large road and other major infrastructure projects, as well as for other projects that combine public and private resources – a project structure commonly referred to as the P3 project. This means that the average contractor or special subcontractor may never end up on a project large enough to warrant a DRB. By 1966, arbitration had become the preferred solvent. This alternative to litigation provided an objective arbitrator (or arbitrator) with construction expertise to hear the dispute. Then, as now, arbitration proved to be more profitable than litigation and took less time to resolve the issue.
Over the next decade, most standard contracts (for example, American Institute of Architects, Associated General Contractors, and National Society of Professional Engineers) included arbitration clauses. Nevertheless, litigation and arbitration resulted in significant costs and delays for a controversial project. The industry needed a good, viable alternative. Ultimately, the CRD process can be extremely effective in mitigating delays and claims on a variety of projects. If it is able to adapt to the ever-changing construction industry while maintaining the basic concepts of early implementation and reasonable selection of neutral CRD members, it may be an effective technique in the future. Multi-stakeholder relationships in today`s complex construction projects can lead to challenges for current model DBBs. What happens if disputes and claims arise from services provided by third parties, such as the designer or subcontractor? While it is not uncommon for subcontractors to refer to and therefore include the terms of the main contract, the applicability of provisions establishing dispute resolution mechanisms is not absolute. The tripartite agreement focuses on the relationship between the owner, contractor and DRB and does not currently provide for the contribution of subcontractors.
In addition, agreements between the owner and the designer are almost never linked to the duties and obligations of the owner and contractor. The amendment of the current CRD regulations, which are both applicable to third parties and enforceable, can be a significant obstacle. To avoid disputes, many construction contracts require mediation or arbitration. But there is another form of alternative dispute resolution that is particularly effective in the construction industry – the use of a dispute resolution board, or “CRD.” Over the years, the construction industry has resolved claims and disputes using a variety of methods. For a long time, informal negotiations and decisions by the architect or engineer were sufficient to resolve most disputes at the operational level. One of the reasons mechanical privileges are such a good remedy for construction payments is that a lien deposit is usually enough to force payment, making litigation unnecessary.
