Dispute Review Boards

Introduction
In construction projects, disputes are almost inevitable. Design changes, unforeseen site conditions, delays, payment disagreements and differing interpretations of contract clauses can all create conflict between owners and contractors. Within the PMI Construction Professional (PMI-CP) body of knowledge, Claims and Dispute Resolution is a key domain, and Dispute Review Boards (DRBs) are one of the most effective tools for keeping disputes from derailing a project.

This guide explains what a DRB is, why it matters, how it works in practice, and how to answer exam questions about it with confidence.

1. What Is a Dispute Review Board?
A Dispute Review Board (DRB) is a panel of impartial, experienced professionals. It is usually made up of three members, though one member is sometimes used on smaller projects. The panel is set up at the start of a construction project, before any disputes arise. Its purpose is to help the parties avoid disputes and, when disputes do occur, to resolve them quickly and fairly while work continues.

Key characteristics include:
• Standing body: The DRB is established early and stays in place for the whole project. It is not formed only after a conflict appears.
• Independent and impartial: Members must have no conflict of interest with either party.
• Expertise-based: Members are typically senior engineers, construction managers, contract specialists or construction lawyers with relevant experience.
• Familiar with the project: Members visit the site regularly and receive progress reports, so they understand the project's history and context.
• Recommendation-based (classic DRB): A traditional DRB issues non-binding recommendations. The parties may accept them or move on to arbitration or litigation.

Related variants you should know:
• Dispute Adjudication Board (DAB): Used in FIDIC contracts. It issues decisions that are binding on an interim basis. The parties must comply unless and until the decision is revised by amicable settlement or arbitration.
• Combined Dispute Board (CDB): Usually issues recommendations, but can issue binding decisions if a party requests it.
• Dispute Avoidance/Adjudication Board (DAAB): Used in FIDIC 2017. It places stronger emphasis on proactive dispute avoidance as well as adjudication.
• Dispute Resolution Board: A term often used interchangeably with Dispute Review Board.

2. Why Are DRBs Important?
DRBs matter because construction disputes can be extremely costly, slow and damaging to relationships. Their main benefits are:
• Dispute prevention: Regular site visits and meetings give a neutral forum where problems surface early. The mere existence of the board tends to encourage reasonable behavior and good-faith negotiation.
• Real-time resolution: Disputes are handled as they occur, not months or years later when memories fade and records are incomplete.
• Work continues: Because disputes are resolved quickly, the project keeps moving. This prevents schedule paralysis.
• Cost savings: A DRB costs far less than arbitration or litigation. Board costs are often estimated at roughly 0.05% to 0.3% of total construction cost.
• High success rate: Industry data (for example, from the Dispute Resolution Board Foundation) shows that the large majority of disputes referred to DRBs are settled without arbitration or litigation.
• Relationship preservation: The process is collaborative rather than adversarial. This protects the owner-contractor relationship.
• Credible, informed recommendations: Members know the project firsthand, so their recommendations carry strong persuasive weight. In many jurisdictions, recommendations may also be admissible as evidence in later proceedings.
• Risk management: A DRB is a proactive risk response that reduces the probability and impact of escalating conflict.

3. How a DRB Works: The Process

Step 1: Contract provision
The DRB must be written into the contract. The clause defines its scope, the number of members, the selection process, cost sharing, procedures, timelines, and whether its outputs are binding or non-binding.

Step 2: Formation and member selection
The process typically works as follows:
• The owner selects one member and the contractor selects one member. Each choice is subject to approval by the other party.
• Those two members then select the third member, who usually serves as chair. This choice is subject to approval by both parties.
• All members sign a three-party agreement with the owner and contractor and disclose any potential conflicts of interest.
• The board is formed at or shortly after contract award, ideally before construction starts.

Step 3: Cost sharing
The owner and contractor usually share DRB costs equally (50/50). This reinforces neutrality, because neither party alone is paying the board.

Step 4: Ongoing involvement
• The board receives contract documents, plans, schedules and progress reports.
• It makes periodic site visits, often every two to four months, to observe progress and meet with both parties.
• It discusses potential problems informally to prevent escalation.

Step 5: Referral of a dispute
• The parties must first try to resolve the issue through normal negotiation at the project level.
• If negotiation fails, either party may refer the dispute to the DRB in writing.
• Each party submits a position paper with supporting documents.

Step 6: Hearing
• The hearing is informal compared with arbitration or court. There are no strict rules of evidence, and lawyers are often discouraged or limited.
• Each party presents its case and responds to the other side. Board members ask questions.
• The focus is on contract documents and project facts.

Step 7: Recommendation or decision
• The board deliberates privately and issues a written recommendation with reasoning, typically within a set period such as 14 to 30 days, depending on the contract.
• It may address entitlement (who is responsible), quantum (how much), or both.

Step 8: Acceptance or rejection
• The parties have a defined period to accept or reject the recommendation.
• If both accept, the dispute is resolved.
• If a party rejects it, that party may proceed to the next tier, usually arbitration or litigation. The DRB recommendation may be admissible there, depending on the contract.
• Work continues throughout the dispute process.

4. Where DRBs Fit in the Dispute Resolution Hierarchy
Construction contracts commonly use a multi-tiered (escalation) dispute resolution process, arranged from least to most formal and costly:
1. Negotiation at the project level, then escalation to senior management
2. Mediation: a neutral party facilitates a voluntary settlement but makes no recommendation on the merits
3. Dispute Review Board: standing experts issue recommendations or decisions
4. Arbitration: binding private adjudication
5. Litigation: court proceedings, the last resort

Note that the order of mediation and DRB can vary by contract. Some contracts place the DRB before mediation, or omit mediation altogether.

DRB compared with other methods:
• Compared with mediation: A mediator facilitates the discussion and does not evaluate the merits. A DRB evaluates the merits and issues a recommendation. A DRB is also standing, while a mediator is usually appointed per dispute.
• Compared with arbitration: Arbitration is binding, more formal, more costly, often happens after the project ends, and is usually ad hoc. A DRB is informal, real-time and typically non-binding.
• Compared with litigation: Litigation is public, slow, very costly and adversarial. A DRB is private, fast and collaborative.
• Compared with an ad hoc board: An ad hoc board is formed only after a dispute arises and lacks project familiarity. It is cheaper upfront but has little prevention value.

5. Advantages and Limitations

Advantages:
• Proactive dispute avoidance
• Fast, informed and fair outcomes
• Low cost relative to formal proceedings
• Preserves relationships and keeps work moving
• Confidential
• Members have technical expertise that judges may lack

Limitations:
• Ongoing cost, which may not be justified on small, low-risk projects
• Non-binding recommendations can be rejected, so the dispute may still escalate
• Effectiveness depends on member quality and party commitment
• Requires contractual setup at the start, and is hard to add midstream
• Possible perceived bias if member selection is poorly managed

When is a DRB most appropriate?
DRBs suit large, complex, long-duration and high-risk projects. Typical examples are tunnels, highways, dams, major infrastructure, public-private partnerships and international projects. They are especially valuable where there are significant unknowns, such as subsurface conditions.

6. Roles and Responsibilities
• Owner/client: Includes the DRB in the contract, nominates a member, shares costs, participates in good faith and provides documentation.
• Contractor: Nominates a member, shares costs, provides timely notices of claims, participates in meetings and hearings, and continues work.
• DRB members: Remain impartial, stay informed, encourage dispute avoidance, conduct fair hearings and issue reasoned recommendations.
• Project/construction manager: Maintains thorough records, ensures contractual notices are issued, tries negotiation first, prepares position papers, and implements accepted recommendations.

7. Importance of Documentation
DRB outcomes depend heavily on evidence. The construction professional should maintain:
• Daily logs and site diaries
• Correspondence and meeting minutes
• Change orders and requests for information (RFIs)
• Baseline and updated schedules, including delay analyses
• Cost records and photos
• Timely notices of claims that comply with contract deadlines

Strong records lead to stronger positions and faster resolution.

Exam Tips: Answering Questions on Dispute Review Boards

Tip 1: Remember the defining features. If a question describes a panel of neutral experts, established at project start, that visits the site regularly and issues recommendations, the answer is a DRB.

Tip 2: Avoidance comes first. PMI emphasizes proactive behavior. The main value of a standing DRB is preventing disputes, not just resolving them. Prefer answers that mention early involvement and prevention.

Tip 3: Know binding versus non-binding. A classic DRB is non-binding. A DAB or DAAB under FIDIC is binding on an interim basis. Read the wording carefully: recommendation usually means non-binding, while decision may mean binding.

Tip 4: Follow the escalation order. When a dispute arises, the best first step is almost always to review the contract and negotiate at the lowest level. Escalate to the DRB only if negotiation fails, and to arbitration or litigation only after the DRB. Answers that jump straight to litigation are almost always wrong.

Tip 5: Work continues. In most contracts, the contractor must continue working during the dispute process. Reject answers that suggest stopping work while waiting for a DRB recommendation, unless the contract specifically allows it.

Tip 6: Check the contract first. In scenario questions, the correct action is often to consult the contract's dispute resolution clause. The DRB's authority, process and timelines come from the contract.

Tip 7: Remember cost sharing and selection. Costs are typically shared equally. Each party selects one member, and those two select the third, who acts as chair. These details are common exam targets.

Tip 8: Distinguish the DRB from mediation. A mediator facilitates, while a DRB evaluates and recommends. If the question mentions technical experts giving an opinion on the merits, choose the DRB.

Tip 9: Scenarios with unaccepted recommendations. If a party rejects the DRB recommendation, the next step is usually the next tier in the contract, such as arbitration. It is not starting over with negotiation, and it is not ignoring the issue.

Tip 10: Documentation and notices. Questions may test that claims must be raised with timely written notice and supported by records. Missing notice deadlines can forfeit entitlement even before a dispute reaches the DRB.

Tip 11: Match the DRB to suitable projects. For questions about choosing a mechanism, DRBs fit large, complex, long-duration projects. Smaller projects may rely on negotiation, mediation or ad hoc adjudication.

Tip 12: Watch for keywords. These include standing, impartial, three members, site visits, real-time, informal hearing, recommendation, position paper, escalation, preserve relationships and avoid litigation.

Tip 13: Eliminate extreme answers. Options that are adversarial, unilateral, or that bypass contract procedures are usually wrong. PMI favors collaborative, contract-based and proactive approaches.

Sample Question
A contractor on a three-year tunnel project disagrees with the owner about payment for unforeseen ground conditions. Project-level negotiations have failed. The contract includes a Dispute Review Board clause. What should the project manager do next?
A. Stop work until the issue is resolved
B. File a lawsuit immediately
C. Refer the dispute to the DRB in accordance with the contract while continuing work
D. Initiate arbitration

Answer: C. Negotiation has failed and the contract provides for a DRB, so the next tier is DRB referral. Work continues during the process. Options B and D skip a tier, and option A breaches the usual obligation to keep working.

Summary
A Dispute Review Board is a standing, impartial panel of experts established at the start of a project. It helps prevent disputes and resolves them quickly through informed, usually non-binding recommendations. It sits between negotiation or mediation and arbitration or litigation in the escalation ladder. It saves time and money, preserves relationships and keeps work moving. For the PMI-CP exam, remember four things: establish it early, follow the contract, escalate step by step, and keep working.