JCT adds project bank accounts to its forms
Only 5% of project participants have any experience of using project bank accounts, and only 30% of projects are likely to use them — according to an industry-wide consultation by the Joint Contracts Tribunal (JCT). The consultation coincided with the publication of new documentation enabling PBAs to be used with any JCT main standard contract forms.
Prof. Peter Hibberd, JCT chairman, says, ‘JCT has always provided for fair payment terms within its contracts, but poor payment practices have been an issue in the industry for some time. Although the introduction of PBAs for public-sector projects is a laudable approach in principle, the construction industry does not appear enthusiastic about their use.
‘As four out of five building projects use a JCT form of contract, how we deal with PBAs is important to the industry.’
Tony Bingham, a construction barrister, says of PBAs, ‘Sir Michael Latham first suggested this approach in the ’90s, although they were referred to as trusts then. The idea was simple and the approach logical, but contractors in general have been reluctant to see their introduction.
‘It was particularly disappointing, considering the PBAs are one of the central themes of the Office for Government Commerce’s drive to promote fair-payment practices, that PBAs have not been used on the Olympic site.’
Tony Bingham concludes, ‘The idea for PBAs is sound, but the execution is currently not right. Attitudes within the industry need to change for PBAs to become more accepted and for one of the industry’s major bugbears, and the cause of most conflict, to begin to be addressed.’
