Praise for Scottish government as it lowers project bank account threshold

Contractors in Scotland have welcomed a move by the Scottish government to reduce the threshold for using project bank accounts (PBAs) from £4.1m to £2m.  

Since 31 October 2016, PBAs have been mandated for use by Scottish government bodies. From 19 March 2019 public bodies must include a PBA in tender documents for public works contracts with an estimated value or more than or equal to £2m (£5m for civil engineering projects).

A PBA enables all construction project participants to be paid from “one pot” (rather than payments having to cascade down to the supply chain through the different contractual layers). The payments are ring-fenced to protect them from upstream insolvencies and payments can be made to all parties within 12-15 days.

The government was praised for its action by the Specialist Engineering Contractors’ Group Scotland, the representative body for contractors working in Scotland’s construction industry. Speaking on behalf of the group its national executive officer Alan Wilson said that he was delighted with the announcement.

“We have been pressing the Scottish government for some time to reduce the threshold to £2m,” he said. “Clearly the Scottish government has been listening and industry SMEs will be the prime beneficiaries of this lowering of the threshold,” Wilson said.

Scottish public bodies responsible for a total of £1bn of projects have either used a PBA(s), included a PBA in their ITTs or indicated their intent to use a PBA. The Scottish government is also stepping up its efforts to encourage all bodies involved in public sector procurement to implement PBAs.