13th Annual Spring Symposium in
Dispute Resolution
April 25, 2013
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DRB Presentation
What is a DRB?
History of DRBs
Benefits of DRBs
Recommended elements for a successful DRB
DRB ethics
DRB selection
Dispute Resolution Board Foundation (DRBF)
A success story
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WHAT IS A DRB?
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Dispute Review Board (DRB)
A DRB 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.
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Dispute Review Board (DRB)
“… a real-time ADR process for the resolution
of issues and claims, controlled by the owner
and the contractor.”
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Dispute Review Board (DRB)
A Dispute Review Board has the ability to "look
forward" in a collaborative way to help the
parties minimize impacts of unplanned events
that will affect the job tomorrow, rather than
"looking back" to assess blame for yesterday
(distinguishing DRBs from mediation and
arbitration, which only look back).
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HISTORY OF DRBs
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History of DRBs
Early 1970’s tunneling industry conducted studies on
dispute resolution
First DRB used on second bore of I-70 Eisenhower
Tunnel in Colorado in 1976
1996 DRB Foundation established; DRB Manual
published
By 2010 over 2,200 US projects worth US $200 billion
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History of DBs - International
1981: First International DB, El Cajón Dam, Honduras
1995: The World Bank makes DBs mandatory for all
World Bank-financed projects over US $50M
1997: Asian Development Bank & European Bank for
Reconstruction & Development adopt DB
Worldwide, roughly 100 DRB contracts using DRBs
start every year, worth over US $5 billion per year
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Application to Types of Projects
Public and Private Projects
Airports
Ports
Bridges
Power plants
Buildings
Underground
Dams
Universities
Energy
Highways
What do they
have in common?
Lengthy duration
Complex site
and/or
construction
methods
High risk
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Region 1 DRB Projects 1975-2010
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293
1
55
1
22
2
21
6
33
7
1
44
13
2
26
1
667
5
4
25
4
1
2
1
1
12
5
2
3
DC
2
12
5
1
36
1
10
824
Puerto Rico
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17
1
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DRBs in Texas
Started in 1993
Owners: US Dept. of Energy (4)
Dallas Area Rapid Transit (17)
TX Dept. of Criminal Justice (5)
North Texas Tollway Authority (1)
MTA of Harris Co. (6)
The City of San Antonio (1)
Contract values ranged from $9 to $140 million
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Low Cost Resolution
High Cost Resolution
Negotiation
Partnering
More Control
Facilitation
DISPUTE REVIEW BOARD
Early Neutral Evaluation
Joint Experts
DISPUTE REVIEW BOARD
Mediation
Less Control
Mini-Trial
Arbitration
Court Special Master
Court Settlement Conference
Bench or Jury Trial
ADR Continuum
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BENEFITS OF DRBs
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Primary Benefits of the DRB Process
Claim avoidance
During periodic meetings, the DRB reviews the
status of outstanding issues and inquires about
any potential problems or disputes.
Dispute resolution
Early identification and resolution of disputes in
“real time” is critical to the success of the DRB
process.
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Other Benefits of the DRB Process
DRB recommendation is helpful for:
Owners because it provides a basis and
record for making decisions.
Contractors because it provides an early
opportunity to resolve disputes that may impact
project schedule or cash flow.
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DRB Reviews
The DRB process appears to be effective in
assisting in the resolution of disputes, leading to
more timely completion of projects, reduced cost
overruns and avoidance of claims.
Utilization of DRBs on larger projects can serve to
motivate greater cooperation between parties
resulting in fewer unresolved claims and a reduced
litigation potential.
Florida Department of Transportation,
Office of Inspector General
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DRB Reviews
WMATA believes the presence of the Board
encourages both the owner and contractor to
settle their differences in most instances without
DRB hearings. In cases where hearings are
necessary, resolutions can be reached fairly and
expeditiously.The Board can also prove beneficial
in minimizing the adversarial relationships of the
parties and is useful in guiding resolution to issues
prior to them becoming a dispute.
Washington Metropolitan Area Transit Authority,
Department of Capital Projects Management
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DRB Reviews
The Dispute Review Board…is truly a Best
Practice within the industry. It is practical, reliable
and cost-effective.
Federal Highway Administration
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University of Washington
DRBs used for over 20 years
60 "vertical" projects valued at $6 Billion
2 formal DRB hearings
6 informal hearings
No arbitration or litigation
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DRB Track Record
The DRB process has experienced a very high
rate of success in resolving disputes without
arbitration or litigation.
Resolution rate to date: over 98%
of matters going to the DRB do
not go on to later arbitration
or litigation.
98%
Resolved at
project level
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RECOMMENDED ELEMENTS FOR
A SUCCESSFUL DRB
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Recommended Elements
for a Successful DRB
1. DRB members are neutral and subject to the
approval of both parties.
2. DRB members sign a Three-Party Agreement
obligating them to serve both parties equally.
3. DRB’s fees and expenses are shared equally
by the parties.
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Recommended Elements for a
Successful DRB
4. DRB is organized when work begins, before
there are any disputes.
5. DRB keeps abreast of job developments by
periodically reviewing relevant
documentation and regularly visiting the site.
6. A DRB Advisory Opinion can assist the
parties in the early resolution of a dispute.
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Recommended Elements for a
Successful Standing DRB
7. Either party can refer a dispute to the DRB.
8. An informal but comprehensive hearing is
convened promptly.
9. The written recommendations of the DRB are
non-binding, but are admissible later in
arbitration or litigation.
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Recommended Elements for a
Successful Standing DRB
10.The DRB members are absolved from any
personal or professional liability arising from
DRB activities, and cannot be called as
witnesses in subsequent proceedings.
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DRB ETHICS
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DRB ETHICS
Five Canons
1. Strong emphasis on disclosure
2. Conflict of interest shall be avoided - no ex parte
communications with the parties
3. Do not divulge any confidential information to
others unless approved by the parties.
4. Conduct meetings and hearings in an expeditious,
diligent, orderly and impartial manner.
5. Impartially consider all disputes referred to it. Reports
shall be based solely on the provisions of the contract
documents and the facts of the disputes.
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DRB SELECTION
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Selection of Board Members
An essential element in the DRB process is that
all parties are completely satisfied with each
Board member. Board members should be:
Experienced and technically qualified.
Impartial with no conflicts of interest.
Trained in the DRB process.
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Criteria: Technical Experience
Parties must evaluate qualifications for the
specific project experience as to:
Type of construction
Specific construction methods
Type of project delivery method
Types of foreseeable disputes
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Criteria: Other Skills
Experience with interpretation of contract
documents.
Experience in resolution of construction
disputes and Alternative Dispute Resolution.
Ability to analyze disputes and write reports
in a clear, concise, and logical manner.
Complement other skills sets on DRB.
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Criteria: Neutrality/Availability
Completely:
neutral
impartial
objective
Avoid conflicts of interest for the duration
of the project.
Available to fulfill duties as required.
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Criteria: Training/Role
Training, experience, and understanding of
the DRB process and DRB role.
Dedicated to the objectives and principles of
the DRB process and DRB role (including
DRB Canons).
Demonstrated ability to manage people and
processes.
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Board Member Selection Methods
Typically, a three member Board is selected by:
Each party proposes a member for approval
by other party; two selected DRB members
nominate the third for party approval.
Each party proposes a slate of candidates,
from which the other party makes a selection;
two selected DRB members nominate the third
for party approval.
Parties jointly select all three members.
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Selecting the Third Member
Third member should supplement technical
expertise and background of the first two
members.
If to act as Chair, candidate should have DRB
experience as well as expertise in managing
processes.
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Three-Party Agreement
Contract that binds DRB members and
the contracting parties.
TPA includes:
Scope of DRB services.
Responsibilities of the parties.
Duration of DRB’s services.
Process for termination.
Legal relations.
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Three-Party Agreement
TPA includes:
Compensation rates and expense reimbursement
guidelines.
Cost splitting between parties.
Invoicing process.
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Three-Party Agreement
The TPA typically includes the following:
Each Board member shall be held harmless for any
personal or professional liability arising from or related to
DRB activities. To the fullest extent permitted by law, the
OWNER and the CONTRACTOR shall indemnify and
hold harmless all Board members for claims, losses,
demands, costs, and damages (including reasonable
attorneys fees) for bodily injury, property damage, or
economic loss arising out of or related to Board members
carrying out DRB activities.
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Dispute Resolution Board
Foundation (DRBF)
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DRBF
The Dispute Resolution Board Foundation
(DRBF), was established in 1996 and is a nonprofit organization dedicated to promoting the
avoidance and resolution of disputes worldwide
using the unique and proven Dispute Resolution
Board (DRB) method.
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DRBF
The DRBF provides assistance with the
worldwide application of the DRB method by
providing general advice and suggestions tailored
for the conditions and practices existing in local
areas.
The DRBF publishes the DRBF Practices and
Procedures Manual, which offers a thurough
review of the DRB concept for owners,
designers and contractors to employ the
process more effectively.
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DRBF
Worldwide presence with Three Regions:
1 - United States and Canada
2 - Europe, Asia, Central and South
America, Mexico and Africa
3 - Australia and New Zealand
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Dispute Resolution
Board Foundation
19550 International Blvd., Suite 314
Seattle, WA 98188
1-206-878-3336
Toll free (USA only) 1-888-523-5208
Fax 1-206-878-3338
Email: home@drb.org
Website: www.drb.org
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A SUCCESS STORY: CDOT
PROBLEMS LEAD TO A
SOLUTION
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Background on New Disputes and
Claims Resolution Spec
2005: More than 40 claims totaling over $19 Million
2006: QAR – Quality Assurance Review
Basically said that the old process was not working
costing both CDOT and contractors lots of $.
CDOT/CCA Task Force Formed
Goal was simply to reduce size and number of
claims by developing a new spec, which added
DRBs, and training for both CDOT and
Contractor personnel.
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Task Force Vision
Empower the project level people
Provide them with a step-by-step process with
time lines to work with
Provide them with a tool to assist them - the
Dispute Review Board of impartial experts
Resolving issues at the time they occur, not
after the project is over
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CDOT DRBs
Standing DRB: Typical three member board
formed at the beginning of a project
On Demand DRB: Board formed when the
dispute has not been resolved at the Project
Engineer and Resident Engineer levels
No dispute can proceed to a claim unless it
has been heard by a DRB
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CDOT Track Record = SUCCESS
In January 2008, the Dispute, DRB and Claim spec was
added to CDOT contracts.
Totals from January 2008 to December 31, 2012
Contracts Awarded: 635 Totaling almost $2 billion
Standing DRBs: 13, Standing DRB Hearings: 3
On Demand DRB Hearings: 13 (6 on 2 projects)
DRB Recommendations Rejected:
CDOT – 0
Contractor – 4
To Dec. 31, 2012, only one claim has reached the
Chief Engineer, was settled after arbitration started
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Questions and Discussion
Thanks for your interest and attention.
Contact: Bill Hinton
seabee1111@msn.com
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