Construction firms paid more quickly

13th May 2014

Milestone reached in contractors payment scheme.

The first payment has been made in an innovative scheme designed to speed up payments to contractors working on public sector construction projects.

Project Bank Accounts (PBAs) are ring-fenced accounts from which payments can be made directly and simultaneously by a client to contractors and sub-contractors, improving cash flow through the supply chain.

The Scottish Government has been co-ordinating trials, and a significant milestone was reached today when contractors received the first PBA payment from NHS Lanarkshire on two work packages worth £1.4 million at Monklands Hospital.

The payment was made under NHS National Services Scotland’s ‘Frameworks Scotland 2’ agreement with Graham Construction.

Other schemes where PBAs are currently being trialled include Transport Scotland’s Inveramsay Bridge project, and Scottish Borders Council’s Galashiels Transport Hub project.

Deputy First Minister Nicola Sturgeon said: “This first payment under the Project Bank Account scheme represents a significant milestone, and is testament to the Scottish Government’s support for contractors and subcontractors working on public sector construction projects.

“We are absolutely committed to ensuring every pound spent on infrastructure investment goes as far as possible to support businesses and jobs, building greater resilience into the broader Scottish economy.

“I fully recognise the considerable effort of those involved in the development of PBAs, and in particular the efforts of those at NHS Lanarkshire and Graham Construction, who have worked tirelessly towards this notable achievement.

“Our focus on prompt supply chain payment will continue, and we will work closely with our delivery partners in other pilot projects to build positively on what we have learned through our experience at Monklands.”

The PBA trial was an early recommendation of the Review of Public Procurement in Construction, co-authored by Robin Crawford and Ken Lewandowski.

Welcoming the first payment, Mr Crawford said: “We are delighted that this important stage has been reached.

“Our report is clear that the endemic culture of late and extended payment within construction supply chains has to change because of the pressures which it is placing on subcontractors, and the damage it does to the economy as a whole.

“Project Bank Accounts assure prompt payment and we welcome the progress being made by the Scottish Government in implementing trial projects. We also commend NHS Lanarkshire and the firms involved at Monklands Hospital for taking the initiative and achieving this notable first.”