Spec Finish

FIND OUTMORE Rudi and Len delivered a webinar about PBAs on behalf of the CICV Forum recently. To watch it visit: www.bit.ly/PBA-webinar and download the presentation at: www.cicvforum.co.uk/useful-links/ i 28 www.thefis.org Benefits for subcontractors PBAs offer subcontractors two major benefits: • the first is faster and regular payments. PBAs avoid the need for payments to cascade down through the different layers of contracting. Instead, everybody is paid simultaneously from the same ‘pot’ within 12-15 days; and • the second benefit is that subcontractors’ monies are ring-fenced, so once they’re in the PBA they’re protected in the event of the main contractor’s insolvency. Monies are held in trust which means that they can’t be raided by the main contractor’s insolvency practitioner. The monies in the PBA are held by the client and main contractor as joint account holders on behalf of the beneficiary subcontractors. Problems with PBAs To date, the experiences of subcontractors on PBA projects have been very positive. After Carillion collapsed in January 2018, Highways England, the largest user of PBAs in the south, reported that subcontractors on their projects had not lost any money. But it hasn’t all been plain sailing. Some subcontractors, while enthusiastic about PBAs, have reported that they don’t receive information about whether a PBA has been set up on their projects. Others are aware but for one reason or another have not been included within the PBA arrangements. Main contractors have often given the excuse that some or all of their subcontractors don’t wish to be a part of the PBA. Even where they are beneficiaries of the PBA, firms are not always made aware when their payments have been deposited in it. Tightening the rules The Scottish Government is keen to ensure that the PBA ‘net’ in Scotland is cast as widely as possible to include more small firms, and in August, it issued updated guidance for the public sector. This means that where PBAs are implemented, they must be available to and accessible by all subcontractors and sub-subcontractors. All commissioning bodies, i.e. public sector construction procurers, must maintain a record of the PBA status of every subcontractor and sub-subcontractor and the reasons for any firm declining to join the PBA. Furthermore “the main contractor must include PBA provisions in all invitations to tender for sub-contracted work and require subcontractors to do likewise in all prospective subcontractors”. Main contractors must be able to provide evidence that PBA-relevant information has been sent to all subcontractors on the project. The Scottish Government’s model PBA contract provisions already require main contractors to give written reasons to clients for excluding a subcontractor from the PBA. They are also required to obtain a written explanation from subcontractors declining to join the PBA and to make this available to the client. An example PBA template notice is shown on page 29, which clients must now send to main contractors for circulation to all subcontractors on the project. CASE STUDY: Scotland’s Rural College Claire Lorimer, Procurement Contract Manager at Scotland’s Rural College (SRUC), was responsible for procuring the main contractor for the Avian Innovation and Skills Centre at SRUC’s Bush Estate, next to SELECT HQ in Midlothian. A PBA was used successfully for the delivery of the £5 million facility, and Claire was very positive about the benefits it brought to the supply chain. She said: “In view of the potential consequences and impact on subcontractors if a main contractor was to go into liquidation or withhold payments, SRUC was keen to embed the PBA into the terms and conditions for this project. “In doing so, it minimised potential risk, while providing confidence of timely payments to both the main contractor and subcontractors. “This balanced the interest of all within the construction supply chain ensuring consistent cashflows and established fair and transparent payment practices. Once set up the PBA was easily managed and administered.” More about PBAs PBAs aren’t complicated and shouldn’t be feared – they merely offer certainty of payment timing and give you protection in the event of a contractor’s insolvency. To read more about the process, please visit the Useful Links section of the CICV Forum website at: www. cicvforum.co.uk where you’ll find a dedicated section on PBAs. Among the material is a link to a particularly helpful Scottish Government Publication Implementation of Project Bank Accounts you won’t find clearer guidance anywhere. Tell us your experiences FIS is working closely with SEC and SELECT through the CICV Forum in Scotland and wants to find out if you have been, or are involved in a PBA? Have you been on a PBA project where youweren’t invited to join it? If you have been involved in a PBA, did you receive information regarding your payment amounts going into it and the dates when they were deposited? SELECTwould like to hear feedback about your experience of PBAs. Please email iainmcilwee@thefis.org with your feedback. FOCUS — Project bank accounts