"Departments need to provide specialist small and medium sized suppliers with greater certainty that they will be paid on time to reinforce the trust that should exist between all parties for collaborative working to operate effectively. If this does not exist in the supply chain then specialist suppliers, who can significantly influence the value for money obtained on a project, will have little incentive to innovate. Considerable losses can also be incurred over payment disputes which will ultimately feed their way back into the costs for the client.
Para 3.33 NAO Report
'Improving Public Services through better Construction'
Andover achieved Demonstration Project status with Constructing Excellence and scored the highest ever mark in the process for innovation and best practice.
CE's case study said "Trade contractors liked the assurance of prompt payment via the Project Specific Bank Account where their entitlements are earmarked and paid by BACS. The Project Bank Account removed the concern of late payment."
"There is very good alignment between the mechanism of Project Bank Accounts and the principles of 'Fair Payment' and it is recommended that public sector clients should progressively specify use of PBA where practical and cost effective"
'Guide to Best Fair Payment Practices'
"The 48 pages of the Fair Payment Charter are largely made up of statements of the bleedin' obvious worked up by some marketing wizard - but that project bank accounts idea is a real corker.
The construction industry's biggest customer is to begin "project bank accounts". This isn't just aspirations and bull. Barclays and Bank of Scotland have already got the paperwork in place. Here is the new money payment machine. The client at the top of the heap pays all the interim payment sums due on a, say, monthly certificate into a trust account. Then, all those who are in the supply chain and registered as part of the subcontractor or supplier receive their cash direct from the trust. So does the main contractor.
The trust status of the account is essential in order to avoid potential problems if the contractor goes into receivership. The account, in effect, is held in trust on behalf of the whole of the supply chain, in a similar way to how a solicitor operates a client account. This prevents a receiver seizing the proceeds of the account."
RLB won the Innovation category for our work on Project Bank Accounts. The judges comments were "At long last someone has taken forward a key point from Sir Michael Latham's report, 'Constructing the Team' i.e. setting up project bank accounts. This piece of work clearly illustrates that not only can it be done, but that everyone benefits and nobody loses."
RLB were highly commended in the innovation award in respect of Project Bank Accounts. The judges said "This has the potential to make the biggest impact of all these innovations" - we must wait and see.