Scotland switches to project bank accounts

The Scottish Government is introducing project bank accounts on public work projects to protect subcontractors from insolvency and payment abuse.

From 31 October, project bank accounts will be a tender requirement on building projects over £4m and civil engineering projects valued over £10m.

The Scottish Government has been co-ordinating trials for a couple of years and contractors received the first PBA payment from NHS Lanarkshire on two work packages worth £1.4 million at Monklands Hospital in April 2014.

Project bank accounts ringfence payments for subcontractors and suppliers, who are typically paid within five days of the commissioning public body paying the value of the interim certificate into the account.

Legal trust status ring-fences amounts in the project bank account, protecting the funds should a main contractor fall into adminsitration.

Main contractor will be exempt from if 75% of the work is carried out in-house or by associated firms.

Finance secretary Derek Mackay said: “This is an important milestone in the government’s commitment to improving cashflow for smaller firms.

“The PBA guidance translates trial programme experience into a simplified common approach with practical resources for implementation in Scottish Government projects. We urge all other organisations involved in commissioning work on Scotland’s infrastructure to use PBAs.”

The Specialist Engineering Contractors’ Group Scotland, which represents the largest sector (by value) in Scottish construction, said it was delighted by the move.

Chairman Eddie Myles said: “SEC Group Scotland has been the leading exponent of PBAs since they are the most effective method for ensuring regular and secure payments to construction supply chains, especially SMEs.”

from Construction Enquirer http://www.constructionenquirer.com/2016/09/28/scotland-switches-to-project-bank-accounts/

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