Project Bank Accounts are ring-fenced trust accounts whereby construction project cash (from the Employer) is held by trustees, protected from the various contractors' risks of insolvency.
This benefits the supply chain in particular because:
- Main Contractors can't use supply chain cash to smooth their own cashflow issues (driving efficiencies and reducing the incidence of 'bought' projects);
- Employers are protected in the case of Main Contractor insolvency, because the sub-contractors have all been paid for works done up to the last valuation date;
- Payments are made to suppliers and sub-contractors simultaneously, no matter where they sit in the supply chain.
Despite their clear benefits, adoption of Project Bank Accounts (or 'Project Payment Accounts' as some new FinTech companies are calling them for regulatory reasons) has been slow.
Highways England is the largest user of Project Bank Accounts.
Top UK Project Bank Account Providers (2021)
- Lloyds Bank*
- Barclays Bank*
- Royal Bank of Scotland*
- BNP Paribas*
- SEB Bank*
- Danske Bank*
- DOS & Co.
* we aren't able to find any information about this online, but they appear to be a government supplier from the information we found at the Local Government Association Project Bank Account Masterclass notes.