Project bank accounts: the second wave of security of payment?

Abstract

Purpose The purpose of this study is to identify building contractors’ views as to the need for, impact of and barriers to the use of project bank accounts (PBAs) in the UK construction industry. Design/methodology/approach A cross-sectional research study was carried out by the use of questionnaires to collect quantitative data. The population for the research was of construction professionals working as full-time employees for either main (Tier 1) or specialist contractors (Tiers 2-4). Findings Contractors consider PBAs as an effective initiative to encourage fair payment. There is uncertainty, however, as to whether PBAs will result in project cost savings. Head contractor resistance is perceived to be the biggest barrier to the use of PBAs. Adoption of PBAs in private-sector construction projects is likely to be slow. Research limitations/implications The relative infancy of PBA usage in the construction industry means that responses are largely based on awareness as opposed to experience. Nevertheless, survey data represent a snapshot of contractors’ perceptions with respect to PBAs, which may be used as a benchmark against which to compare future studies to monitor how contractors’ views and expectations have changed with time. Originality/value The survey results will be of particular interest to those international jurisdictions who are considering, or who have already embarked on, the path of trialling and/or using PBAs in the public sector.

SME’s disinclination towards subcontracting in the public sector markets: an attributional perspective

“…Late payments to subcontractors have been identified in previous research into subcontracting in the UK's construction sector (Bibby Financial Services, 2018). There is a need for more wide-scale adoption of the project bank accounts (PBAs), which was designed to execute fair payment practices on a construction project (Griffiths, Lord and Coggins, 2017). The government should broaden the reach of this initiative to address the issue of late or unfair payment practices in public sector subcontracting.…”

Blockchain in the built environment and construction industry: A systematic review, conceptual models and practical use cases

“…Introduced in section 3.3, Project Bank Accounts have been offered as one solution to prevent the impacts of insolvencies, non-payments and late-payments. They were first proposed by the National Audit Office in 2005 and later endorsed by the Office of Government Commerce in 2007 (Griffiths et al, 2017). A PBA is an electronic bank account that is set up by the client or the client and the main contractor to ring-fence funds for different contractors by putting the funds into a trust.…”

Unfair Payment Issues in Construction: Re-Thinking Alternative Payment Method For Tier-1 Contractors to Subcontractors

“…Arewa and Farrell (2016) suggest that commercial interest of many Tier 1 contractors' influences unfair payment practices in the construction sector. Indeed, existence of multi-tiered hierarchical structure together with cascade payment obligation places most subcontractors and suppliers at risk of unfair payments practices in the construction sector (Griffiths et al, 2017).…”