HS2 backs project bank accounts on key contracts

Aaron Morby 4 years ago
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HS2 has approved the use of project bank accounts across key contracts to support cash flow through its supply chain.

Fair payment campaigners says HS2 decision could mark a tipping point for PBA use
Fair payment campaigners says HS2 decision could mark a tipping point for PBA use

The landmark step to issue payments from one pot without having to cascade through multiple tiers of contractors will also safeguard against the risk of upstream insolvency for subcontractors and suppliers.

HS2 took the decision to back PBAs after a successful trial of the payment system on two enabling works contracts.

It is now working with its construction contractors to roll-out PBAs across existing and future contracts.

Given that HS2 will generate an estimated 400,000 contracts across its supply chain and that two-thirds of these will be won by small to medium sized enterprises, the decision brings further assurance at a time of economic concern due to the Covid-19 pandemic.

In May, HS2 announced that it was implementing 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 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).

“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.”

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