Our Project Bank Accounts (PBA's) provide project-specific, pre-funded, ring-fenced bank accounts to protect Funders, consultants and Contractors engaged in high-value and/or long-term construction projects.
A Project Bank Account (PBA) is a ring-fenced, stand-alone bank account operated by a bank or payment service provider to hold funds for Employers/Developers/Funders who are engaging in construction projects. It is designed to simplify the payment process, offering security and accelerating the time to payment to all those participating in the project, while also protecting them from insolvency higher-up in the chain.
Following Carillion's collapse in January 2018 when it owed millions to its supply chain, project bank accounts have found favour again with those organising large or complex projects. When ISG collapsed in 2024, we experienced a major surge in the construction sector for laws to be updated and for ring-fenced bank account to be put into service to protect against the insolvency of the contractor and prevent another ISG/Carillion-style disaster in the construction supply chain - the compelling reasons for the use of PBAs has never been stronger.
Major UK government projects (including Crossrail and most National Highways jobs) are already paid for using project bank accounts (though the Cabinet Office has published little information on the exact use of PBAs in the public sector), though use of project bank accounts in the private sector seems a little slower because of the perceived difficulty in setting one up. That's where we come in!
There is no greater complexity for the project team in the monthly payment process, and they are suitable for projects of any size.
Each month, the Contractor, design team and consultants for the construction project submit their invoices to the Project Bank Account (PBA) operator, who then collates them and sends them on to the Employer/Developer/Funder for approval.
On receipt of the approval, the Project Bank Account (PBA) provider pays each invoice directly to the invoicing party.
The JCT publishes project bank account documentation, and we are very happy to use this (with minor amendments) when operating project bank accounts for clients and their construction projects. This suite was updated in 2022 to make it more user-friendly than the previous 2016 version.
Project bank accounts offer plenty of advantages, including certainty of payment, protection on insolvency of the Contractor, fewer defaults, a faster time to payment and more predictable cash flow for all concerned.
Absolutely - in fact, it is to facilitate prompt payment to sub-contractors and the wider supply chain that the government has mandated their use - the idea being that subcontractors are paid at the same time as the Contractor, rather than sometimes many months later.
This gives sub-contractors comfort that they will get paid, reduces the credit they must extend the Contractor, and protects the sub-contract supply chain in the event of insolvency.
Not at all. Setting up a project bank account is very straightforward - it involves us carrying out our compliance checks on the Employer and any Funder, and on the Contractor and any other participants (though for many in the prime residential construction sector, we have already done so).
Thereafter, the Project Bank Account documentation (either JCT or bespoke) gets agreed between the client's lawyer, the Contractor's lawyer and the project bank account provider. Additional parties (including the supply chain and the wider design team) can then 'sign up' to the project bank account process by completing a simple agreement, providing their compliance information and beginning to submit their invoices.
Yes, then can and do - they are not just for UK government public sector projects and not just of interest to the Cabinet Office. The protection of the construction supply chain and the importance of making the monthly payment cycle as straightforward as possible, guarding against main contractor insolvency, are equally of use and interest to private sector clients, if not moreso.
Particularly where projects are being funded by trusts, and the trustees want to manage their cash-flows and administrative burden and have another pair of eyes review the monthly payments and send them for approval, all collated and neatly presented, the use of project bank accounts can be very welcome.
They can also drive cost savings. Where large sub-contractor packages can be let to the main contractor but funded via the project bank account for prompt payment to subcontractors on short payment deadlines, this frees up cash in the system and reduces the amount of working capital that a sub-contractor must finance, thus enabling the sub-contractor to deliver keener pricing to the Employer.
dospay is a trading name of DOS & Co. Ltd, a company registered in England and Wales with company number 08294966.
DOS & Co. Ltd. is registered with the Financial Conduct Authority under the Payment Services Regulations 2017 (FRN: 833374) for the provision of payment services.
All of our escrow and third-party managed accounts are segregated and safeguarded at the Bank of England.
