Resolve Disputes before they Grow

Construction News - 26/06/2008

Greg Brownlee
Managing Director - Blake Newport

There is a tendency in the UK to think about disputes only when they occur. The option of using dispute boards works, however, because it gives foresight and allows pre-planning. Dispute boards are a relatively new form of dispute resolution in the UK. The significant difference between a dispute board and other adjudication techniques is that they are appointed at the start of a project. It will exist in one of two forms: a Dispute Review Board or a Dispute Adjudication Board. They differ only in the fact that those recommendations made by a DAB are binding, and must be immediately implemented unless overturned by arbitration or litigation.

Both are financed at contract level, and made up of a panel of usually three experienced and impartial reviewers who, in an ideal scenario, are appointed before a contract begins. This allows the board to become part of the project, influencing the performance of the contracting parties.

Dispute boards are widely implemented in the USA, with the first dispute board used on the Boundary Dam project in Washington in the 1960s. In the UK, the best known use of DRBs was on the Channel Tunnel project but they have also been applied on the Docklands light rail extension, and Saltend Power Plant, as well as on highway and hospital projects.

But do they work? Of the 1200 projects that have used DRBs in the US, over $90 billion of construction costs have been aggregated and the majority of DRB recommendations made, have been accepted. In essence, yes they work – and the key reason behind it? The level of integration.

Some may argue that decisions are non-binding, meaning that unless all parties are fully signed up to the approach then there is no concrete means of enforcing recommendations. However dispute boards are formed with communication and expertise in mind, and made up by members that adhere to strict guidance from FIDIC, ICC and ICE, centring upon neutrality; impartiality; independence; disclosure; qualifications; experience; availability; and confidentiality. The board meets with all parties, ensuring regular updates on progress and addressing issues. The focus is therefore not on enforcing decisions but upon resolving disputes informally when they occur. It is only when a dispute cannot be resolved in this manner that it is referred to the dispute board, which then produces a recommendation for its resolution.

With the clients adopting this approach in the tendering process, contractors can have the security that fair play will prevail – this in turn promotes openness and partnering. Once on site the DRB is able to influence behaviour, preserve on-site relationships and filter out disputes.

The benefits outweigh the drawbacks. The figures support the claim that preventing problems before they escalate will benefit a business’ bottom line.

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