This article is co-authored by Angie Nolet, VP of Consulting & Construction Disputes at TransPerfect Legal, and Iman Hyder-Ellis, VP of Construction Disputes at the American Arbitration Association.

Construction disputes rarely pop up overnight. Usually, they brew slowly: an unanswered request for information, a disputed change order, an unowned schedule impact. But the show must go on—and so must the project. Meanwhile, the dispute percolates, like lava in a caldera. So as the project veers off schedule and racks up costs, parties begin tallying their losses, finger-pointing at others, and dreaming of recoupment. By the time the project ends, their positions are calcified, their umbrage is real, and they’re off to the litigation races.

That is the chain reaction that Dispute Avoidance and Resolution Boards (DARBs) address.

A DARB is a standing neutral Board, established at the project’s nascency, which works with the parties to identify, manage, avoid, and (hopefully) resolve disputes while the work is ongoing. Unlike traditional dispute resolution, which usually begins after substantial completion and with angry, lawyered-up parties, a DARB stays engaged throughout the project via regular meetings, site visits, progress reports, informal discussions, and, when necessary, written recommendations. [1]

For construction projects, that collaborative–adversarial distinction matters enormously. With a DARB, the parties needn’t wait until the end of the job to reconstruct events, and they needn’t wait until bad feelings blossom because the Board follows the project in real time, is familiar with the contract, the people, the schedule, the site conditions, and the project history, and can help the parties address problems before they become claims.

A DARB empowers the parties to spot issues early and solve them before they hamper the project or relationship.

The Board’s familiarity with the project and its history nets several meaningful benefits, both to project and party.

• Process discipline that surfaces issues early: Parties are encouraged to raise concerns when they first arise (and are less expensive to resolve), rather than waiting until the end of the project. Regular meetings, progress reports, and issue tracking help the parties manage conflict as part of project governance.

• Preserve relationships and the project schedule: Construction projects require ongoing cooperation. A DARB gives parties a structured way to disagree without immediately escalating into adversarial proceedings. By addressing disputes in real time, the Board can help prevent unresolved issues from slowing performance or impacting the schedule.

• Construction expertise begets more-credible decisions based on fresher facts: Board members can be selected for relevant technical, legal, scheduling, engineering, architectural, or project-delivery experience. Project decision-makers receive timely, neutral input before the facts go stale.

• Reduce the cost of end-of-project claims by narrowing disputes: Even if the Board doesn’t fully resolve an issue, it may clarify the issue’s scope, reduce the amount in dispute, or identify what’s material. And when issues are addressed during performance, there’s less need to reconstruct the project history months or years later. The cost of a standing Board may be far less than the cost of formal arbitration or litigation over major project claims.

• Preserve later ADR options: A DARB can coexist with mediation, arbitration, litigation, or other contractual dispute mechanisms.

And yet, the most important feature of a DARB may be its dispute-avoidance role.

By the time parties make their way to traditional dispute resolution, they’re often lawyered-up and come to the table with their stances cemented. By contrast, a DARB encourages parties to raise issues contemporaneously—while options are both plentiful and non-catastrophic. The Board may help the parties clarify what the dispute actually is (no kitchen-sink approach in DARB proceedings!), identify missing information, separate technical issues from legal ones, or (strongly) encourage the parties to resolve a problem before it becomes a formal claim.

The Board’s early involvement can also mitigate misunderstanding. Many construction disputes are not caused by bad faith. They arise because the parties interpret the contract, schedule, scope, or responsibilities differently. A DARB can surface those diverging viewpoints early and resolve them amicably.

The AAA-ICDR DARB model: how Boards are formed.

The AAA-ICDR DARB process is a construction project-specific one. Established at the start of the project, the Board visits the project regularly and focuses on dispute prevention—or at the very least, early intervention—and fosters collaboration while preserving the parties’ right to mediate, arbitrate, or litigate. [1]

A Board features three key components:

• A structured process through AAA-ICDR DARB rules and procedures.

• Access to experienced construction neutrals with backgrounds in construction law, engineering, architecture, project management, contracting, scheduling, and related disciplines.

• Administrative support so that the parties are not trying to design the process from scratch in the middle of a live project.

That administrative support includes help with Board appointment, meeting logistics, project communications, site meeting minutes, hearing coordination, recommendation procedures, and management of Board-member fees and expenses.

This support, and the Board itself, are critical on complex projects where a seemingly small issue can have cascading effects. A delayed submittal delays procurement, which stymies the schedule, which necessitates acceleration, which increases productivity, which spikes cost. And by the time the parties formally dispute the issue, the original problem may be buried under a tangled web of consequences.

With a DARB, parties address issues closer to the source, forestalling snowball downstream effects.

A DARB’s structure can mirror the project’s needs.

The Board may be composed of one or three neutrals. A one-person Board may fit small or low-risk projects, or those where cost is a significant concern. But a three-person Board is advisable for larger, more complex, or higher-value projects because it allows for a broader range of expertise and perspectives. And on very large programs with multiple contracts or delivery packages, the parties should consider a panel structure with qualified neutrals assigned to specific issues or project segments. [2]

The selection of Board members is critical. The parties should seek neutrals who understand not only dispute resolution, but the realities of construction delivery. Depending on the project, that may include experience with scheduling, delay analysis, design-build delivery, infrastructure, energy, transportation, vertical construction, public-private partnerships, heavy civil work, construction defects, engineering, procurement, or complex change management. And on very large programs, the parties can pick specialized neutrals and assign them to specific issues or segments.

The Board should be independent, impartial, and trusted by both sides. This is essential because the Board’s credibility is what gives the process value. If the parties believe the Board understands the project and will treat both sides fairly, they are more likely to use the process early and to take the Board’s recommendations seriously.

The DARB’s structure and authority should be written into the contract.

A DARB works best when it’s built into the project contract itself. The contract should say that the parties agree to use a DARB administered by AAA-ICDR and should plot the Board’s structure, selection process, scope of authority, compensation, confidentiality, meeting cadence, recommendation process, and escalation path if the Board’s recommendation does not resolve the issue.

Because clear drafting can prevent downstream friction, parties considering a DARB should address several issues in the contract:

• Board selection:

  • Timing: When the Board will be appointed

  • Structure: Whether the Board will have one or three members, or be a panel

  • Selection: How Board members will be chosen, plus any qualifications they must have

  • Conflict checks: How conflicts and disclosures will be handled

• Meetings and site visits:

  • Cadence: How often meetings and site visits will occur

  • Format: Whether meetings will be virtual, in-person, or hybrid

  • Attendees: Who must attend meetings

• Documentation: What progress reports must be submitted

• Dispute resolution process:

  • Submissions: How issues are submitted to the Board

  • Nature of recommendations: Whether recommendations are binding, nonbinding, temporarily binding, or admissible in later proceedings

  • Counsel: Whether counsel may participate and, if so, in what role

  • Confidentiality: How confidentiality will be handled

  • Rejections and unresolved issues: What happens if a party doesn’t comply with a recommendation, and how issues proceed to more formal dispute resolution processes

• Fees and expenses:

  • Board fees: How Board-member fees and expenses will be allocated

 

AAA-ICDR rules, roster, and administration.

The AAA-ICDR DARB follows rules, operating procedures, and hearing procedures tailored to dispute Boards. AAA’s construction rules and fee materials identify the AAA DARB as a construction-related process separate from ordinary arbitration and mediation filings. [3]

As such, AAA-ICDR’s operating procedures contemplate a standing Board that remains informed throughout the project. [4] A DARB is only as effective as its composition and rhythm. The Board must consist of subject-matter experts who are regularly provided with information. And the parties need regular opportunities to raise concerns. Thus, the process requires enough structure to be credible, but not so much rigidity that it becomes another litigation track.

AAA-ICDR’s role can help maintain that balance.

DARB mechanics include meetings, site visits, and regular updates, plus a dispute-resolution process right-fitted to the project.

DARB meetings are solution-oriented and practical, not litigious.

A DARB’s purpose is to avoid costly formal litigation. They aren’t meant to turn every disagreement into a mini-arbitration. Rather, they give parties a recurring neutral forum to discuss project status, identify developing risks, and prevent problems from escalating.

A typical meeting may include:

• Project status and progress updates

• Schedule updates and key milestones

• Pending change orders

• Requests for information and design clarifications

• Payment issues

• Potential delay or disruption impacts

• Procurement or supply chain concerns

• Safety, access, coordination, or sequencing issues

• Status of previously raised disputes or claims

• New issues that may affect cost, time, quality, or performance

• Look-ahead items for the next reporting period

• Tentative scheduling for the next meeting or site visit

The Board may also conduct field observation during site visits. This allows the Board to understand the project physically, not just through written submissions. In construction, seeing the site, understanding access constraints, observing sequencing, and hearing from project personnel can be invaluable.

The meetings also create accountability. If an issue is raised at one meeting, the parties know it may be revisited at the next. That alone can encourage earlier internal review, faster decision-making, and more disciplined documentation.

If the parties can’t resolve an issue at a DARB meeting, they may present the dispute to the Board.

AAA-ICDR’s hearing procedures provide a streamlined framework. In larger or more-complex disputes, the Board may hold a preliminary conference to: (1) organize the hearing, (2) identify the issues to be addressed, (3) determine whether entitlement and quantum should be bifurcated, (4) establish the order of presentation, and (5) identify who can and should attend. [5]

The Board may require the parties to produce documents before the hearing. AAA procedures empower the Board to notify the parties if it wants documents produced and to require the parties to exchange documents or exhibits before the hearing. [5]

As for the hearing itself, the parties typically submit position statements, which describe the dispute, their position, the basis for that position, and supporting materials. The procedures also encourage the parties to agree on a simple statement of the dispute (when possible), to stipulate to as many facts as possible, and provide specific contract references for both entitlement and quantum issues. [5]

In short, these procedures streamline the hearing by crystalizing the issues, all while the project marches along and the parties still—theoretically, at least—share a common goal: complete the project. This tailored and collaborative process is a major advantage of a DARB.

Recommendations can be binding or nonbinding, comprehensive or bifurcated, per the parties’ agreement.

The DARB’s recommendation may be nonbinding or binding depending on the parties’ agreement, contract, or ad hoc.

For those who fret that a nonbinding recommendation is simply much ado (and cost) for nothing, compare its harbinger-like effect to an advisory judgment. Consider: a panel of neutral, expert arbiters review the most-salient evidence and opines on it. Unless the parties choose duds as their panel members, the Board’s recommendation should, if nothing else, auger a mediator, arbitrator, or judge’s conclusion.

And that, in turn, helps the parties assess risk. A recommendation may, for example, confirm one party’s position, expose weaknesses, narrow the issues, clarify the amount in dispute, or create settlement momentum. Relatedly, it can enable business leaders to make informed decisions before legal costs and project disruption multiply.

Further, recommendations needn’t be comprehensive. When appropriate, the Board may issue a recommendation on entitlement only and defer on quantum if the parties can negotiate an amount. AAA hearing procedures contemplate that the Board may decide to issue recommendations on merit only and request that the parties try to determine the amount. If they cannot, the Board may schedule further meetings to address unresolved issues. [6]

If the recommendation resolves the issue, the project moves forward. If it does not, the parties may proceed to mediation, arbitration, litigation, or another agreed process. The DARB does not eliminate those options. It gives the parties an earlier opportunity to avoid needing them.

A Board isn’t free, but the cost is paltry compared to a full-blown dispute.

“But what does this cost?” is often the first question parties ask. The answer depends on the project.

Myriad factors affect the cost of a DARB: number of Board members, project length and complexity, frequency of meetings, travel requirements, whether meetings are virtual or in person, and whether formal hearings are needed.

General industry commentary often describes DRB costs (DARB’s cousin) as a small percentage of total project value. CPR has reported DRB Foundation figures estimating total costs for a three-member DRB at roughly 0.05% of final construction cost for a relatively dispute-free project, up to about 0.25% for more difficult projects with multiple hearings, with an average around 0.15% for projects in the $50 million to $100 million range. To put that in perspective, a DRB for a $50 million project would cost about $75,000. [7] By contrast, we’ve seen document review cost $10 million on a $30 million case—scaled up, that would be $15 million on a $50 million project. Granted, the parties in that matter were acrimonious at best, and the issues were plenary, but the point stands: DRBs are far, far cheaper than full-blown litigation.

Put differently, the Board is not free, but the cost should be compared to the cost of unmanaged disputes. A single major delay claim, termination dispute, acceleration claim, construction defect dispute, or arbitration can consume far more in legal fees, expert fees, executive time, project disruption, and relationship damage.

A practical point worth highlighting: AAA-ICDR’s DARB process is not the same as filing an arbitration. The DARB is a project tool. The parties are generally planning for Board-member compensation, administrative support, meeting time, and any hearing activity if disputes arise. Unlike an arbitration filing, the value proposition is not paying to fight a mature dispute. It is investing in a standing process designed to prevent or narrow disputes before they become more expensive.

For project teams, this can make the DARB easier to justify at the contracting stage. The question is not simply, “What does the Board cost?” The better question is, “What would one unresolved project dispute cost if we wait too long to address it?”

Is a DARB right for my project?

DARBs are especially useful for projects that are complex, long-lived, risky, or require significant stakeholder coordination. Conversely, projects that are small, short-lived, or low-risk may not justify the cost of a standing Board.

Complex projects that might warrant a DARB may include:

• Large commercial construction projects

• Infrastructure projects

• Transportation projects

• Energy and power projects

• Healthcare and hospital construction

• University and campus projects

• Public works projects

• Public-private partnerships

• Design-build or progressive design-build projects

• Projects with complex phasing or sequencing

• Projects involving multiple prime contractors or major subcontractor interfaces

• Projects with substantial schedule risk

• Projects with high public visibility

• Projects where continuity and relationship preservation are especially important

A DARB is also useful where the parties anticipate recurring issues that will require fast, practical input during performance, such as change management, access constraints, owner-directed changes, design evolution, supply chain problems, or interface issues among project participants.

Projects where a DARB may not be the right fit.

A DARB is not necessary for every project.

It may not be the right fit for a very small project, a short-duration project, or a low-risk project where the likely dispute exposure does not justify the cost of a standing Board.

It may also be less effective if the project is already substantially complete and the parties are already entrenched in fully developed claims. While ad hoc Boards exist, the DRB Foundation notes that bringing in a Board after a project is significantly advanced or completed sacrifices many of the benefits of a standing Board and is generally not recommended. [2]

A DARB may also be a poor fit if the parties are unwilling to participate in good faith, if project decision-makers will not attend meetings, if the contract does not clearly define the Board’s role, or if the parties expect the Board to function as a substitute for project management.

The Board cannot fix a dysfunctional project culture by itself. It works best when the parties want the project to succeed and are willing to use the process to address issues early.

Types of issues that may require a DARB.

The types of issues that may benefit from a DARB are broad, but they usually fall into several categories:

• Schedule and delay issues may include critical path delays, concurrent delay, access problems, late approvals, late design information, delayed submittals, delayed procurement, resequencing, acceleration, disruption, or missed milestones.

• Change order issues may include entitlement disputes, pricing disputes, cumulative impact, disputed directives, constructive changes, field changes, scope gaps, or disagreements over notice.

• Design and technical issues may include errors or omissions, constructability concerns, design coordination, BIM conflicts, design-build responsibility, code compliance, performance specifications, or differing interpretations of drawings and specifications.

• Site condition issues may include differing site conditions, hazardous materials, subsurface conditions, weather impacts, utility conflicts, unforeseen obstructions, environmental issues, or access constraints.

• Payment issues may include disputed pay applications, withholding, retainage, setoff, lien-related issues, pass-through claims, subcontractor claims, or disputes over approved versus pending change work.

• Quality and defect issues may include workmanship concerns, nonconforming work, testing failures, commissioning problems, warranty concerns, rework, or disputes over acceptance.

• Project administration issues may include notice compliance, documentation disputes, claim preservation, meeting minutes, schedule updates, cost tracking, and responsibility for project controls.

• Termination or default issues may include cure notices, suspension, performance concerns, replacement contractor issues, takeover work, or disputes over completion obligations.

These issues are often interconnected. A design clarification may cause a procurement delay. A procurement delay may affect the critical path. A schedule impact may trigger acceleration. Acceleration may lead to productivity loss. Productivity loss may become a cost claim. A DARB is useful because it can see these issues in context, while they are developing.

Conclusion

The construction industry does not need more ways to fight after projects go wrong. It needs better ways to keep projects from going wrong in the first place.

AAA-ICDR’s DARB process gives owners, contractors, and other project participants a practical, construction-focused mechanism for early intervention. The Board follows the project, understands the facts as they develop, meets regularly with the parties, and offers neutral input when issues arise.

For the right project, a DARB is not just a dispute resolution tool. It is a project governance tool, a risk management tool, and a relationship-preservation tool.

The best time to resolve a construction dispute is before it becomes one.

Considering a DARB for an upcoming or active construction project? Connect with TransPerfect Legal’s Construction Disputes team or the American Arbitration Association’s Construction Division to explore how early dispute avoidance strategies can help keep your project moving.

Sources

[1] AAA-ICDR DARB page: established early, prevention focus, regular meetings/site visits, recommendations.
[2] AAA-ICDR DARB setup and participation.
[3] AAA administrative support: selection, meetings, notices, minutes, recommendations, fees.
[4] DRBF Board models: one-person, three-person, panels.
[5] AAA operating procedures: reports, site visits, meetings.
[6] AAA article on dispute avoidance and jobsite meetings.
[7] AAA hearing rules: position statements, documents, evidence, presentation.
[8] AAA DARB recommendations and further ADR options.
[9] General DRB cost estimates.