Frequently Asked Questions on Dispute Avoidance Boards
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A Dispute Avoidance Board (DAB) is a panel of impartial, experienced professionals usually formed at the start of a project to help manage conflict, encourage dispute avoidance, and resolve any issues that may arise during the project. The goal is to avoid costly and time-consuming litigation or arbitration. DABs are also known as Dispute Resolution Boards (DRBs) or Dispute Avoidance / Adjudication Boards (DAABs) in different contexts.
As of March 2024, there are 117 projects in Australia that have used or are using a DAB, with total contract values exceeding AUD$73 billion. To date, all disputes on these projects have been resolved within the DAB process, without progressing to a judgement from arbitration or litigation. This demonstrates the effectiveness of DABs in resolving issues early and avoiding costly legal proceedings.
A DAB offers numerous advantages:
- Cost-effective: A DAB is relatively inexpensive compared to the costs of litigation or arbitration. For a $250 million project, a three-person DAB generally represents less than 0.1% of the total project cost per year.
- Time-saving: DABs help resolve disputes quickly and prevent delays to the project timeline.
- Improved productivity: A DAB can improve overall project productivity by reducing disputes and fostering a positive project culture.
- Better governance: DABs offer structured guidance for addressing contentious issues, helping to improve project governance and decision-making.
- Relationship preservation: By encouraging cooperation and real-time dispute resolution, DABs help preserve working relationships between parties.
The costs of establishing and maintaining a DAB are far lower than the expenses associated with a full legal dispute in court. DABs focus on resolving issues early, avoiding the need for extensive legal procedures and reducing the risk of a prolonged and costly court battle. DAB's have the ability to prevent Security of Payment claims and other dispute processes that can lead to court or where an an Adjudicator, Arbitrator or Judge imposes a judgement on the parties instead of assisting the parties to find their own solution with the help of an independent third party.
Yes, DABs are much faster than court proceedings. Disputes can often be resolved within weeks or months, whereas litigation can take years. The DAB process is designed to address issues in real-time, ensuring project timelines are not disrupted by lengthy legal delays.
Settlements reached through a DAB are typically more mutually satisfying, as both parties are involved in the resolution process. The outcome is more likely to be adhered to since the parties themselves have agreed on it. Additionally, DAB decisions are interim binding, providing clarity and certainty for all parties.
The most challenging part is typically the initial setup, including selecting the right DAB members and agreeing on the terms. Once the DAB is in place, however, the process is often straightforward and highly effective in preventing and resolving disputes.
The 2024 draft update to the AS4000 General Conditions of Contract includes provisions for the use of Dispute Avoidance Boards (DABs) as well as mediation and other forms of dispute resolution designed to promote dispute prevention and resolution throughout the project. The update encourages parties to engage early to resolve issues before they escalate into formal disputes, reducing the need for litigation or arbitration. The inclusion of DABs and mediation in AS4000 aligns with best practice in the industry and strengthens the overall approach to conflict avoidance and dispute management.
MEDIATUS can help by advising on the setup and management of a DAB, providing qualified and impartial panel members, and ensuring that the process runs smoothly throughout the project. We offer guidance on dispute avoidance techniques that are suitable for your organisation and your project to ensure successful dispute resolution.
Connect with us now at connect@mediatus.com.au or call 0452071075 to find out more.
