Construction

Construction projects are unusual in that large sums of money are committed long before the finished work exists. Employers often pay for mobilisation, materials or off-site manufacture months in advance, while contractors and subcontractors routinely carry labour and supply costs before being paid. This creates a natural imbalance between when money moves and when value is delivered.

At the same time, construction projects typically involve many parties. Main contractors, specialist subcontractors, consultants and suppliers all rely on payment flowing smoothly through the project. Even where relationships are strong and contracts are well drafted, the complexity of these arrangements can make payment risk difficult to manage in practice.

Independent payment structures such as escrow accounts and third-party managed payment accounts are increasingly used to reduce these pressures. They introduce clarity, transparency and discipline into how project funds are held and released, without changing the underlying commercial deal.

Payment risk in construction is structural rather than exceptional. Works are usually certified after they are carried out, meaning that contractors and subcontractors extend credit as part of the normal course of a project. Retentions then delay the final release of money even further, sometimes for years after practical completion.

Insolvency remains a persistent risk in the construction sector. If an employer, contractor or key supplier fails, funds that were assumed to be available can quickly become inaccessible. Where project funds have been mixed with a party’s general cash, recovery can be slow or uncertain, even for parties who have fully performed their obligations.

Additional complexity arises where projects are funded through special purpose vehicles, trusts or offshore structures. In those cases, even a clear contractual entitlement may not translate into prompt payment without additional safeguards around how money is held during the life of the project.

In construction, escrow is commonly used where one party needs reassurance that funds will be available later, even if circumstances change. A typical example is the protection of retention monies. By placing retention funds into escrow, contractors gain comfort that certified sums cannot be lost through employer insolvency or refusal to pay.

Escrow is also used for advance payments and off-site works. Where an employer pays for items before they are delivered to site, escrow can ensure that those funds are either applied as intended or returned if the works do not materialise. This reduces the need for reliance on bonds or guarantees alone.

More widely, escrow can be used as cash-backed security where works affect third parties, such as adjoining owners or statutory undertakers. Holding real funds in escrow provides a clear and accessible source of protection, without the delays and uncertainties that can arise with insurance-based solutions.

Third-party managed payment accounts are used where the focus is on controlling how project money flows, rather than holding it against future conditions. These accounts allow funds to be ring-fenced for a specific project and paid out only in accordance with agreed instructions or certifications.

A common use is the operation of project-specific payment structures that pay contractors, subcontractors and suppliers directly. This reduces reliance on a single party’s cashflow and helps ensure that everyone in the supply chain is paid promptly for certified work, even if difficulties arise elsewhere.

Managed payment accounts are also used in higher-value or complex projects where employers want greater transparency over how their money is being applied. By separating project funds from a contractor’s general accounts, these structures provide clearer oversight and reduce the risk of funds being diverted to other projects.

Pricing depends on the structure, value and duration of the arrangements. There is no single fixed fee, as projects and payment flows vary.

Pricing usually reflects three main elements. First, the work involved in setting up the arrangements, including compliance, onboarding and preparation of the account documentation. Second, the ongoing administration of the account while funds are held. Third, the handling of payments or releases during the life of the project.

What pricing covers is the independent holding of funds, administration of agreed payment mechanics, record-keeping, reporting, all bank fees and support throughout the project. It does not cover legal advice, contract administration or dispute resolution, which remain the responsibility of the parties and their advisors.

If something goes wrong, the account agreement provides a clear framework for dealing with it.

If there is a mistake, delay or disagreement about instructions, funds remain safely held in escrow while the issue is addressed. We follow the process set out in the account agreements and do not release funds unless and until the agreed conditions are met.

If a party has a concern about how the account is being operated, we have a formal complaints process. This allows issues to be raised, reviewed and resolved in a structured way, with escalation routes available if needed.

We are a specialist provider focused on escrow and managed payment arrangements. Escrow is not an add-on to another service. It is a core part of what we do.

Funds are held securely and separately, with infrastructure designed specifically for escrow rather than adapted from other uses. Account opening is handled efficiently, and arrangements are administered through a dedicated digital escrow and payments portal, giving authorised parties visibility and a clear audit trail.

Advisors often recommend dospay because we sit independently of the transaction, operate within a regulated framework, have a proven track record and focus on doing one thing well: Holding and administering escrow funds in a clear, neutral and predictable way.