Project Bank Accounts are helping to pay government suppliers on time
2 Jul 2014 03:34 PM
Three years on, the
government is meeting Government Construction Strategy targets on paying firms
and on the construction pipeline.
Francis Maude, Minister for the
Cabinet Office, announced that £5.2 billion worth of government projects
in the construction industry are now being paid through Project Bank Accounts
(PBAs).
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As part of its long term
economic plan for Britain, the government will do more to ensure prompt payment
in government contracts. PBAs are a world leading initiative to
ensure firms working on a government construction project are paid on time,
wherever they are in the supply chain.
The 2011 Government Construction
Strategy set a target for £4 billion of contracts to be awarded
that use PBAs by the end of 2013 to 2014. The government has exceeded
this target: the total awarded is now £5.2 billion.
How Project Bank Accounts
work
In the construction industry, it
is common for smaller contractors to have to wait lengthy periods to be paid
for work that they’ve already completed. APBA is a ring-fenced bank
account from which payments are made directly and simultaneously to a lead
contractor and members of the supply chain. Through faster payments, those
lower down the supply chain benefit from that cash-flow.
John. M. Stevens, Director, Dodd
Group said:
Without doubt this has to be the
way forward for our industry if the current payment culture is to be
eradicated. PBAs help eliminate the excuses for late or reduced
payment, the burdens on overhead costs and the programme delays as a result of
disputes and resultant insolvencies, which often result in SMEs being
hardest hit.
Pipeline of government
construction opportunities
Government statistics published
today show that the ‘pipeline’ of
future government construction opportunities has risen in value by
£13 billion to £116 billion in July 2014.
The £13 billion increase
is calculated by reviewing differences between the December 2013 pipeline
(which shows spend from 2013 to 2014 onwards) and the July 2014 pipeline (which
shows spend from 2014 to 2015 onwards.) The value of the December 2013 pipeline
is £103 billion, a £13 billion increase in the pipeline. The values
quoted in both pipelines are nominal except for the rolling stock element of
High Speed 2 spend, which has been indexed at 2011 to 2012
prices.
This shows the
government’s continued commitment to the sector. Businesses can use this
information to plan more effectively, based on what government proposes to
build, construct or renovate in the coming years. The government is now adding
opportunities to the pipeline for up to 2020 and beyond.
Speaking before the 2 July
2014 Government
Construction Summit, Minister for the Cabinet Office Francis Maude
said:
As part of our long-term
economic plan this government is reforming public sector construction and
helping develop a more efficient and competitive industry that will lead to
more jobs and better value for taxpayers.
To win the global race, we must
support the smaller suppliers which are the lifeblood of our economy.
We’ve beaten our target on Project Bank Accounts but we will keep pushing
ahead to ensure suppliers of all sizes are treated fairly.