It should be noted that their bill sets the threshold for public sector projects at $500,000 as a trigger for the use of ABPs. This is a relatively low threshold compared to projects for which the ADP is currently being used because of the associated installation costs. Note also that Ms. Abrahams` bill focuses on public sector projects: there is no such requirement that ABPs be used for private contracts. Private parties are free to agree on their own terms and, as a rule, to stay away from the PBA. Private contracts tend to be worth less than public projects and costs can be prohibitive. In the case of contracting bodies such as the JCT, which simplify the installation process by providing standard forms for the implementation of PBAs, those negotiating contracts for larger private projects should perhaps consider at an early stage the greater benefits of PBAs. In particular, reducing the scope for payment disputes and protecting the supply chain from insolvency risks could make PBAs attractive in these uncertain times, overshadowed by the uncertainty of Brexit. In September 2009, the National Construction Board proposed that government projects begin to take over project bank accounts unless there were compelling reasons not to do so. In 2011, the government`s construction strategy set a target of $4 billion in contracts by the end of 2013 by 2014. Project bank accounts are more likely to be used in projects of higher value – given the installation and management costs and the potential need to train the team that is not aware of such agreements, the parties feel that they are not suitable for smaller projects (a large contractor audit in 2014 confirmed this, indicating that they were only suitable for projects valued at least $50 million). However, project bank accounts could also be attractive to parties involved in lower-value projects involving many suppliers.
It is likely that the government will continue to support the use of ABAs by public sector organizations. The Scottish Government recently joined the Welsh Government by lowering the mandatory use threshold for the PBA to $2 million. Within the private sector, PBAs are increasingly seen as tasty for large projects, but their wider use remains subject to doubts. In September 2016, the Scottish Government announced that, as of 31 October 2016, the proposed bank accounts will be used for all of your construction projects worth more than $4 million. The Stirling-based Robertson Group warned that the main contractors needed to rebalance margins following the move. The Chair, Bill Robertson, said: “If the proposed project bank account procedure, which is supported by the public sector, is followed across the sector, the additional profit element needed to implement such a system will require a shift in margins within the industry. In January 2019, Debbie Abrahams, MP for Oldham East and Saddleworth, introduced a 10-minute bill to force authorities to pay suppliers through the project`s bank accounts. It was agreed that the bill would be read a second time on March 1.
Ref www.constructionmanagermagazine.com/news/second-reading-project-bank-accounts-bill/ In 2011, the government recommended PBAs for public sector projects in its construction strategy, which sets market value targets to be defined through PBA.