HS2 adopts project bank accounts
HS2 has approved the use of project bank accounts (PBAs) across key contracts on the first phase of the project.
The PBAs are expected to allow for speedier payments to companies throughout the supply chain because they are made out of one pot and do not have to cascade through multiple tiers of contractors.
They had already been trialled on two existing enabling works contracts:
- Costain/Skanska’s phase 1 enabling works in area south; and
- Morgan Sindall/Bam Nuttall/Ferrovial Agroman’s phase one enabling works in area central.
PBAs will now be implemented across other existing and future contracts.
HS2 said that the PBAs have been shown to provide an element of protection against insolvencies upstream in the supply chain. The high-speed rail project is expected to generate an estimated 400,000 contracts across its supply chain, with two-thirds of these predicted to go to small- to medium-sized enterprises.
The move follows an announcement in May that HS2 would implement faster payments at all levels of the supply chain in response to the pandemic.
Andy Cross, rail systems procurement director, said: “I am thrilled that we have taken this crucial step to further strengthen our fair payment policies and in so doing, support companies at all levels of the supply chain through the use of PBAs. HS2 will play a critical role in the recovery of the UK’s economy as we emerge from the pandemic, supporting and creating jobs across the construction industry. This announcement means that companies, big or small, working with us will feel confident and supported as we work together to build Britain’s new low-carbon, high-speed railway.”
Rudi Klein, CEO of the Specialist Engineering Contractors (SEC) Group, added: “As the lead campaigner for using PBAs, SEC Group applauds the decision of HS2 to use them (alongside other measures such as the abolition of retentions). In recent years we have having a dialogue with HS2 on promoting improved payment security for HS2 supply chains. Implementing PBAs now will be a massive boost to construction SMEs struggling to make ends meet as we emerge from the current crisis. HS2 will also benefit since PBAs will encourage more collaborative working and help reduce construction costs. Given HS2’s decision there’s no longer any excuse for contracting authorities not to use PBAs.”