SEC calls for job payments from central bank

Contractors could save £2bn a year if project bank accounts became an industry norm, according to the Specialist Engineering Contractors' Group (SEC).

The claim follows an SEC survey of 123 specialist engineering companies last week, which found that two-thirds of firms thought the system of paying contractors from a central bank account as jobs were finished would reduce costs.

SEC chief executive Rudi Klein said: "A lot of costs in construction are down to long payment periods, which means companies have to finance themselves by borrowing. These accounts take interest payments out of the system."

Of the 67% that thought project bank accounts would save them cash, 77% said it would reduce costs by up to 5%, while 15% said it would save them as much as 10%.

SEC president Lord O'Neill of Clackmannan said the findings reinforced the decision of the Public Sector Construction Clients' Forum to back the use of project accounts.

"These figures show that current payment arrangements in the industry, which lend themselves to abuse and manipulation, are adding unnecessarily to the industry's costs," he said.

[Contract Journal, 7th Feburary 2007, p 2]