23.07.20
HS2 contractors to use Project Bank Accounts
Companies within HS2 Ltd’s supply chain are to receive further support through the newly approved use of Project Bank Accounts (PBAs) across key contracts on Phase One, an initiative that has been welcomed by the construction sector.
The use of PBAs provides better transparency of payments and allows for speedier payments for companies at all levels of the supply chain. Payments are made out of one pot and do not have to move through multiple tiers of contractors.
On the back of a positive trial of PBAs on two Enabling Works Contracts, HS2 Ltd is now working with its contraction contractors to implement these across existing and future contracts.
PBAs have previously shown an element of protection against insolvencies upstream in the supply chain. Given that HS2 will create an estimated 400,000 contracts across its supply chain and that two-thirds of these will be won by small to medium sized initiatives, this is an important boost of confidence for the sector.
With the economic concern surrounding the Covid-19 outbreak, this is a further step HS2 is taking to provide certainty and assurance for companies in, and aligned to, the construction industry.
In May, HS2 announced that it was implementing faster payments at all levels of the supply chain in response to the outbreak.
Rail Systems Procurement Director, Andy Cross 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, said: “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.”
Image: HS2 Ltd