Project bank accounts hep tackle payment abuse
Research published by the Specialist Engineering Contractors’ (SEC) Group and Constructing Excellence in December 2020 revealed that Project Bank Accounts (PBAs) are gaining traction across the whole of UK construction.
Three years ago the demise of Carillion highlighted the extent of payment abuse in the UK construction industry. In an effort to counter this public sector construction procurers have been using project bank accounts to ensure that SMEs in construction supply chains receive their due payments.
With the publication of the Government’s Construction Playbook - which will be the best practice manual for public sector construction – both organisations believe that this amounts to a significant booster to improving supply chain performance and promoting building safety.
Speaking on behalf of Highways England, Lloyd Biddell said that PBAs are the most effective method for secure and regular cash flow: “Using them…..ultimately helps us to deliver our programme to improve our road network, and besides efficiencies, they’re also helping us to do the right thing for our suppliers.”
In 2012 East Riding of Yorkshire Council became the first local authority to use PBAs. Speaking for the Council, Steve Baker said: “Due to this success [of the first PBA] we now use PBAs for all projects over £5m and with the experience gained are reviewing lowering this to £2m.”
SEC Group’s CEO, Professor Rudi Klein, and Head of Constructing Excellence, Alison Nicholl, jointly issued a statement praising all those public sector clients either regularly using them or proposing to use them: “We have come a long way since PBAs were first mooted almost 20 years ago as an effective method for curbing payment abuse. Our research shows that PBAs have entered the mainstream as far as public sector construction is concerned; we now encourage private sector clients to follow suit. A major benefit of PBAs is that they encourage collaborate working since the supply chain does not have the distraction about whether or not they will be paid”.
This article orginally appeared on the ECA (Electrical Contractors' Association) website on 22 December 2020.
--ECA
[edit] Related articles on Designing Buildings Wiki
- Cash flow.
- Construction playbook.
- Construction supply chain payment charter.
- ECA articles.
- Escrow.
- Fair payment practices.
- Government Construction Board.
- Government construction strategy.
- Housing Grants Construction and Regeneration Act.
- Integrated supply chain.
- Interim payment.
- Payment notice.
- Project bank account.
- Prompt payment code.
- Remedies for late payment.
- Scheme for construction contracts.
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