Dispute Boards > Added Value of DBs

The Dispute Resolution Board Foundation has gathered statistics over many years from projects on which dispute boards have been employed and these make for impressive reading.

 

Dispute Boards Reduce the Number of Disputes

On construction projects where dispute boards have been appointed, the average number of disputes referred to the boards is 1.2 per project which is less than the average number of disputes taken to arbitration or to court on projects without dispute boards. This supports the opinion that the very presence of a board is able to provide relatively quick decisions, prevents the submission of spurious claims and unreasonable determinations and reduces posturing by both parties.

 

98% of Disputes are Resolved at Dispute Board Level

On projects where dispute boards have been appointed an impressive 98% of disputes are resolved at dispute board level. Additionally, of the 2% of disputes where one of the parties did not accept the board’s decision and proceeded to arbitration, almost all of the arbitrations supported the dispute board’s decisions.

Most forms of contract state that a party may proceed to arbitration if it does not agree with the board’s decision. Given these statistics, such a party would have to give very serious consideration as to whether to accept the board’s decision on the matter or to proceed to arbitration, in the hope that a new panel of experts would arrive at a different decision. All this of course has an added advantage that the parties may concentrate on construction issues, rather than spurious claims and disputes, with the obvious benefit that this brings to the project.

 

Dispute Boards Offer Opinions and Advice

Another significant advantage to the project through the use of dispute boards is that, in addition to referring disputes to the board, some forms of contract allow the parties to ask the board to provide an opinion on matters related to the contract. If one considers that disputes are often caused by differences in the interpretation of the contract, an opinion on the correct interpretation by the board could very well avoid a claim or alternatively, provide enough confidence in the potential merits of a claim to gainfully pursue the matter.

 

Significant Advantages on Audited Projects

Additionally, on projects that are subject to audit, such as those for government departments or those funded by multilateral development banks, dispute boards can help to endorse determinations and awards made by the party responsible for administering the contract and thus, remove uncertainty that such an award may be criticised by the auditors. This promotes positivity and cooperation amongst the project team and the ability to settle matters amicably at project level.

 

Dispute Boards Prevent Disputes

The presence of a standing dispute board can also prevent disputes, because they:

  • Promote bilateral agreement
  • Facilitate positive relationships
  • Facilitate open communication
  • Facilitate trust and cooperation
  • Minimise inflated claims
  • Minimise unreasonable determinations
  • Minimise posturing
  • Encourage early identification, evaluation and prompt resolution of claims

 

Added Value

In summary, the use of dispute boards adds value in the following ways:

  • Attract lower bids from contractors
  • Better communication on the project
  • Resolution of issues at project level
  • Discourage spurious claims and unfair determinations
  • Fewer end of project claims
  • Savings in arbitration and legal costs
  • Savings in employee’s time
  • Reduced likelihood of overrun
  • Lower total contract completion costs
  • Avoidance of disputes