{"id":508,"date":"2018-05-17T16:06:56","date_gmt":"2018-05-17T15:06:56","guid":{"rendered":"https:\/\/blogs.gov.scot\/public-procurement\/?p=508"},"modified":"2018-06-25T10:10:32","modified_gmt":"2018-06-25T09:10:32","slug":"project-bank-accounts-three-reasons-why","status":"publish","type":"post","link":"https:\/\/blogs.gov.scot\/public-procurement\/2018\/05\/17\/project-bank-accounts-three-reasons-why\/","title":{"rendered":"Project Bank Accounts – three reasons why"},"content":{"rendered":"

Since the turn of the year there has been an increasing focus on Project Bank Accounts (PBAs) as a way of making sure subcontractors in the construction sector get paid quickly, including in situations where an upstream firm becomes insolvent. Here are three reasons why:<\/p>\n

1. Prompt payments and assured cashflow<\/h2>\n

In a PBA, a trust agreement sits alongside the construction contract. By signing up to be a beneficiary of the trust, a subcontractor ring-fences their allocation in the client\u2019s interim payment to the main contractor. The main contractor can still challenge the amount of a subcontractor\u2019s application but, once the resultant amount is deposited into the PBA, the main contractor cannot reduce or withhold it – even if he becomes insolvent.<\/p>\n

Subcontractors\u2019 cashflow is a finely-tuned balance between money they spend in advance of payment on labour, plant, materials and overheads on a range of projects, and the subsequent income from contract interim payments. A PBA protects the part of a subcontractor\u2019s overall cashflow that comes from a public works contract.<\/p>\n

2. Stable employment – personal confidence<\/h2>\n

Cashflow assurance can help underpin corporate stability and lead to more continuous staff employment. For individuals, this helps support their personal aspirations. For clients, it drives competition in the sector and delivers better commercial outcomes.<\/p>\n

3. PBAs are good for local economy<\/h2>\n

Prompt and predictable cashflow can also create a positive cycle where wages earned on delivering public contracts are spent locally on goods and services \u2013 multiplying the impact of infrastructure investment beyond the construction project itself.<\/p>\n

What\u2019s new?<\/h2>\n