.svg)
'Project bank accounts are now acknowledged to be the most effective method of ensuring secure and regular cash flow.'
One of the largest public-sector clients in construction is being hailed as a champion for its approach to project payments.
Highways England have used Project Bank Accounts (PBAs) as their default arrangement for construction projects worth more than a total of £5m since 2009.
In doing so, not only are they saving tax-payers’ money by generating efficiencies of around 1% but have also reduced their average payment cycle to firms in their supply chain to 19 days, says the Specialist Engineering Contractors’ Group. Highways England have also over-achieved on their target for procuring from SMEs.
The company is a member of the Fair Payment Working Group, which is linked to the Government’s Construction Client Board. It accounts for circa 75% of all PBAs in operation by value. By 2020 there is likely to have been £20bn+ worth of contracts let where PBAs have been used.
Trevor Hursthouse, Chairman of the Specialist Engineering Contractors’ (SEC) Group applauded this achievement.
He added: “For over 10 years SEC Group has been campaigning to encourage public bodies to use PBAs. Highways England has demonstrated that PBAs can make a massive difference in ensuring prompt payment to the supply chain.
"They have shortened payment cycles on construction projects and provided protection to sub-contractors from upstream insolvencies; sub-contractors on Carillion projects did not lose out. We are grateful to the leadership and management of Highways England who have demonstrated how a responsible public-sector client can help to stop payment abuse.”
But there are also benefits for clients. As Lloyd Biddell, Head of Cost Intelligence at Highways England explained: “Project bank accounts are now acknowledged to be the most effective method of ensuring secure and regular cash flow. Using them makes Highways England the client of choice in an increasingly competitive market and ultimately helps us deliver our programme to improve our road network, and besides efficiencies, they’re also helping us do the right thing for our suppliers.”