Scottish Government moves to project bank accounts

Published:  02 November, 2016

BESA, Building Engineering Services Association, Project bank accounts w

The Scottish Government’s announcement that project bank accounts (PBAs) are to be used as the preferred method for improving payment conditions and speeding up cashflow on all public-sector projects over £4 million has been welcomed by BESA (Building Engineering Services Association) as a major step towards greater financial stability for the industry. This method of protecting payment to sub-contractors in construction supply chains was imposed on all projects procured by Scottish Government departments from 31 October.

The announcement was made by Scotland’s Cabinet Secretary for Finance, who has been congratulated by BESA, which was heavily involved in the campaign to have PBAs introduced. BESA has called for the rest of the UK to follow suite by implementing a policy that could improve financial conditions for the whole construction sector.

Paul McLaughlin, chief executive of BESA, said, ‘Unfair and abusive payment practices have been a blight on the construction process for decades. The Scottish Government should be roundly praised for taking a bold to remove one of the barriers to efficient project delivery.’

PBA payments can be made within as little as 12 days. Once in the account, the monies are protected from upstream insolvencies and unfair delays.

Public Highways England and the Environment Agency have been using this method for some time, and, on average, ‘Tier 3’ sub-contractors on their projects are paid within 19 days.

Paul McLaughlin added, ‘By improving cashflow through the supply chain, clients can be assured of a more cohesive, harmonious and, therefore, efficient project process.’

He also called for the introduction of digital payment platforms as the next step in the process of ’remedying endemic industry payment problems. This practice would give SMEs the reassurance of transparent and legislatively compliant payment processes supported by electronic banking.’

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