Analysis of Construction Dispute Review Boards

Abstract

The construction industry has long been burdened with inherent adversarial relationships among the parties and the resulting disputes. Dispute review boards (DRBs) have emerged as alternatives to settle construction-related disputes outside courts. Although DRBs have found support in some quarters of the construction industry, the quantitative assessment of the impact of DRBs has not been adequately addressed. This paper presents the results of a research project undertaken to assess the impact of DRBs on the construction program of a large-scale highway agency. Three dimensions of DRB impact were assessed: (1) influence on project cost and schedule performance, (2) effectiveness of DRBs in preventing and resolving construction disputes, and (3) costs of DRB implementation. The analyses encompass data from approximately 3,000 projects extending over a 10-year period (2000–2009). Quantitative measures of performance were developed and analyzed for each category. Projects that used DRBs faced reduced costs and schedule growth (6.88 and 12.92%, respectively) when compared to non-DRB projects (11.53 and 28.96%). DRBs were also found to be effective in avoiding and settling disputes; the number of arbitration cases reduced consistently after DRB implementation, and DRBs have a success rate of 97% in settling disputes for which DRBs were used. Moreover, costs of DRBs were found to comprise a relatively small fraction (i.e., approximately 0.3%) of total project budgets. It was concluded that DRBs were effective dispute prevention and resolution alternatives with no significant adverse effects on project performance.