Crossrail sets historic example with project bank accounts
Reports that Crossrail will be using project bank accounts on all its major contracts have been welcomed by the Specialist Engineering Contractors’ (SEC) Group. Payments for firms in the supply chain delivering Crossrail’s projects will be paid directly out of a ring-fenced bank account.
Trevor Hursthouse, chairman of SEC Group, which represents a sector comprising over 60 000 companies in the UK construction industry, welcomed the news. He said, ‘This is an historic step. It will dramatically change construction industry payment practices, with the result that cash flow to the supply chain, especially to SMEs, will be assured.
The Office of Government Commerce has estimated that the use of fair payment practices such as project bank accounts will reduce the cost of construction projects by as much as 2.5%. This will represent significant savings to Crossrail, as well as reducing the risk of insolvencies which invariably cause disruption to projects.
Trevor Hursthouse concludes, ‘Crossrail has now set an example for all public-sector clients to follow. We hope to see project bank accounts used as a standard on all public-sector projects. This will also help deliver the Chancellor of the Exchequer’s Budget commitment to discharge payment within five days, especially along the supply chain.’
