Shocked by the way principal contractors were failing to pay sub trades and suppliers promptly, in 2013 Jane Hutt, Minister for Finance & Government Business, introduced the idea of “Project Bank Accounts” for all Welsh Assembly backed projects.
Incorporated in the WA’s Construction Procurement Strategy, this was reaffirmed last year and is now to be trialled via projects in Swansea, Flintshire and the Welsh Governments Transport department.
Vital to Protect SME’s
With the vast majority of the Welsh construction supply chain made up of Small and Medium-sized Enterprises (SMEs), Government is concerned that they should be paid on time. They also recognise that up to 120 day delays in payment were /are forcing companies out of business. Since these SMEs play a significant role in the delivery of public sector projects through sub-contracting arrangements, ensuring prompt payment from main contractors is a vital and urgent concern.
Fast, Secure Payment
Representing Best Practice, PBAs ensure better timing and greater security of payment, ensuring prompt simultaneous payment to the main contractor and their suppliers. As ring-fenced bank accounts with ‘trust status’, PBAs allow simultaneous payments to the lead contractor and supply chain partners within 3-5 days of the deposit of money into the PBA, easing cash flow pressures for businesses and supporting closer working within the supply chain. (Read full article)
Meanwhile, 2 firms of Cost Consultants / QS’s report that tender prices are being increased, with contractors seeking to boost margins and walk away from risky jobs.
Mace has hiked its forecast of price increases to 4.5% nationally and 5% for London, while EC Harris & Geeds are predicting 7% and 7.5% increase in tender prices. They also report that the harder line being taken by contractors toward clients is leading to some ‘tension’. (Read the full article).
Keep the Lid on Your Costs
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