Project Bank Accounts are one of the cornerstones of the Government Construction Strategy, setting a fairer more transparent methodology for paying supply chain members on time for work successfully completed.
Whilst the UK Government is still trialling the methodology on pilot projects and frameworks, the Scottish Government is pushing ahead, mandating their use on all government building projects over £4m and civil engineering projects valued over £10m.
The industry feedback on the decision has been mixed.
Taking a positive viewpoint, the Specialist Engineering Contractors' Group Scotland has stated the methodology is "the most effective method for ensuring regular and secure payments to construction supply chains, especially SMEs". The SEC Group has got some good information on Project Bank Accounts here for those wanting to understand more.
Countering this viewpoint, Robertson, one of the largest contractors and service providers in Scotland has stated “If the intended project bank account process promoted by the public sector is pursued across the industry, the additional profit element required to operate such a scheme will require a rebalancing of margins within the industry.”
A suggestion that main contractor profit margins will be impacted by decision may worry clients and the supply chain alike.
Overall, I believe this is a positive step. Guidance and support is needed for all team members, clients, the supply chain, consultants and contractors. It will be very interesting to see how this plays out.
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.”