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Project bank accounts consultation launched

The Joint Contracts Tribunal has launched a consultation aimed at increasing the use of project bank accounts and improving prompt payment practices across the industry.

Chairman professor Peter Hibberd claimed that PBAs were still greatly underused by construction firms, despite continued calls for improved payment methods since the Latham Report in 1994.

PBAs allow for the creation of a bank account into which an employer pays amounts due under a contract, and from which payments due are made to the contractor and subcontractors.

The consultation will ask the industry how the use of PBAs could be improved, as well as for potential alternative approaches.

Mr Hibberd said: “Although a laudable approach, the construction industry does not appear to be enthusiastic about the use of PBAs.

“Consequently, JCT has launched an industry-wide consultation to identify the current and likely take-up of PBAs, and also to see if the industry has better solutions for improving its payment record.”

The announcement came as the JCT – whose contracts are used on about 70 per cent of all building projects in the UK – published new documentation to enable PBAs to be used in conjunction with any of its main standard contract forms.

Mr Hibberd said: “There is certainly a history of poor payment practices in parts of the construction industry, and PBAs may help overcome such practices where taken up by government departments procuring building works.”

The consultation is open to all facets of the industry and will close at the end of next month. The initial results will be published during November.