Posted on April 11, 2021
Several high-street banks now offer construction-specific accounts that will be used for this purpose. The PBA was originally created as part of a sector consultation on the use of project bank accounts and is intended to support the government`s fair payments guidelines as part of the construction strategy. PBAs are another method of payment. They use a special receiver account to enable direct and simultaneous payments, from the contract client to the principal contractor and to the subcontractors participating in a project. Also note that clause X.3 requires payments to be made earlier than usual. As we all know from our own experience, banks generally need several days to raise funds, so a careful employer must make the payment up to a week before the construction contract deadline if they are to be sure of complying with the terms of the PBA agreement. To counter this, will employers simply extend the payment deadline? The Queensland government has introduced new laws requiring a senior contractor to create a Project Bank Account (PBA) for certain projects to ensure that subcontractors are paid for their work. The project`s bank accounts are delineated bank accounts created for construction projects whose purpose is to provide payments directly to the contractor, subcontractor, key team members and supply chain (including consultants) on agreed dates. Parties moving further down the construction chain do not have to wait for the contractor or any other party they have named in the contract chain to pass on the payment to them – the payment is made directly by the bank at the same time as the payment to the contractor. These agreements guarantee the supply chain that payments are made without delay and that payments made in due time will be protected in the event of default by the prime contractor. Project bank accounts (PBA) have proven to be a way to speed up payments through the construction supply chain, with payments made 5 days after maturity. The goal is to reduce the liquidity problems that can lead members of the supply chain to become insolvent, which is potentially catastrophic for projects, both in terms of money and time.
Project bank accounts are most appropriate for projects with complex supply chains, regardless of project size. They can be “dual authority” or “single control” accounts, depending on whether the client and the principal contractor order payments or only the lead contractor. The account is managed on behalf of agents (the client and the order master for accounts with two administrations or only the lead contractor for individual management accounts). This agent status means that in the event of insolvency, the amounts payable to the supply chain are safe and can only be paid to the supply chain.