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Highways England awards £10.4bn through project bank accounts

Highways England has awarded more than £10bn of work through project bank accounts in the last four years, an internal audit has found.

The client confirmed that it would continue to use PBAs whenever possible when procuring work and would also roll out their use for non-construction contracts.

Since 2011, a total of £10.4bn of work has been awarded using PBAs.

The figure marks a major upward revision since last year, when the client’s predecessor – the Highways Agency – reported that £4.5bn of work had been awarded using PBAs between 2011 and 2014.

The figure includes all contracts that have an operational project bank account in place, or a contract where the PBA is in the process of being established, up to the end of June 2015. It includes a small amount of non-construction contracts.

However, Highways England will now roll out PBAs to all non-construction contracts, including for vehicle recovery, support services and design, unless those suppliers involved do not have subcontractors working for them or if the contract value is “very low”, according to Lloyd Biddell, cost intelligence team leader in the commercial and procurement directorate at Highways England.

He confirmed it was still policy to use PBAs “unless there are compelling reasons not to do so”.

He added that the increase in contract awards and the expanded use of PBA was down to their level of success so far on its construction projects.

“Both ourselves and our supply chain have been working closely together to make sure it works and that the benefits are realised,” he told Construction News.

“Our default position is that they should operate a PBA unless there’s a clear-cut case to suggest otherwise.”

In June this year, Highways England estimated that it had made a net saving of 1 per cent across its construction contracts thanks to the use of PBAs.

Specialist Engineering Contractors’ Group CEO Rudi Klein, who has advocated for the increased use of PBAs on construction contracts, said: “The construction industry owes a debt of gratitude to the team at Highways England that has been responsible for achieving this remarkable performance.

“Project bank accounts are the most effective mechanism for ensuring supply chain SMEs are in regular and timely receipt of their cash.

“Other initiatives such as fair payment charters have proved to be a waste of time and effort.”

Construction News reported on Highways England’s progress with PBAs in June this year, with both main and specialist contractors expressing support for their use on roads projects.

Carillion finance director for infrastructure Sundeep Aggarwal said at the time: “I don’t think there is any negative impact for main contractors of more PBAs.”

Other main contractors have been slower to support the increased use of PBAs, however, with a Willmott Dixon study last year suggesting they were “unsuitable” for use on projects worth less than £50m and could actually increase the cost of delivering schemes.

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