Will project bank accounts really address payment problems? We already have several pieces of legislation dealing with late payment. If these haven't improved payment practices, why should a voluntary arrangement on project bank accounts make any difference?
We seem to seek panaceas and produce placebos. I don't think there is a one shot solution nor do I think that project bank accounts address the whole problem.
There is no real problem in getting paid once a month. If you are a subcontractor it may be a long wait for the first payment, then you are in the regular cycle each month. The last payment may be difficult to get and retention is viewed by some as nothing more than a further discount. It strikes me that the real problem is not to get some money each month, but to get the right amount of money each month. This would avoid sums building up into a fund which becomes the last payment on the project.
Real savings there if we can cut the time that people have to finance what they are properly owed.
So which bit of this does the project bank account address? Actually none of it! What project bank accounts will do is provide certainty that the money is in the bank when it comes to the point of actual payment. This, say the specialists, is worth something in terms of knowing that your money is there each month. But it is not the cure for all the payment ills of the industry.
John Riches
Managing Director
Henry Cooper Consultants