No Contract Disputes – Delivering projects successfully using Dispute Avoidance Boards

Engineering construction projects are complex in nature and have significantly increased in size and value in recent years. Challenging ‘Mega-projects’ such as those for transport infrastructure, engage numerous companies employing many thousands of people over long periods of time.

The prevalent bespoke and modified standard form contracts used in Australia for these projects are typically adversarial in nature and are drafted to shift risk towards the contractor. They contain little in the way of project administrative and management guidance, and rarely promote collaboration to achieve good project outcomes. Contract disputes between project parties are therefore an ever-present risk and unfortunately, a common occurrence.

Dispute avoidance and resolution by an independent ‘Dispute Board’ of senior project specialists is a recognised and growing method of preventing differences between the parties from escalating to external legal recourse. They have been used in Australia on 115 projects valued at over $71 billion since 1988, (most since 2000). None of these have resulted in external legal action of arbitration or litigation.

Dispute Boards, which typically comprise of three diversely experienced and qualified project practitioners, are kept regularly informed about project progress and issues. As such that they can be called upon for guidance, opinions, or decisions on how such issues might be resolved. A Dispute Board encourages collaboration between the project parties and promotes the resolution of emerging issues before they manifest into emotionally driven, high-cost disputes which only impact the project negatively. Their influence works well on traditional ‘adversarial’ contracts but is also of great benefit on relationship and alliance type contracts in bringing their vast experience to support the project senior leadership team.

Dispute Boards are not only useful for typical one-off construction projects. There are several examples of Dispute Boards being successfully used on projects and programs for telecommunications, Information Technology, maintenance management, Public-Private Partnerships, and social housing.

This presentation covers the concept, practice, and experience of Dispute Boards in Australia and outlines the contractual approaches used to integrate them into the project management of major projects. It will familiarise project management practitioners with the best practice use of Dispute Boards to avoid or resolve disputes within the project delivery environment so they will be confident in potentially selecting this collaboration tool for successful management of their projects.