Project Bank Accounts (PBAs) are to be implemented on High Speed 2 (HS2) in order to provide greater payment protection for the supply chain.
PBAs allow payments to be made from one pot and mean that money does not have to cascade through different tiers of the supply chain.
HS2 Ltd has said that its approval of PBAs across all key contracts on phase one of HS2 will provide greater transparency and faster payments at all levels of the supply chain.
The use of PBAs has been successfully trialled on two of HS2’s enabling works contracts, which has led to the rolling out of the initiative on the wider project.
PBAs are welcomed by the construction sector as they are seen to provide greater protection against insolvencies upstream in the supply chain. HS2 Ltd has said that this approach will add confidence to the small to medium sized companies that are expected to win two thirds of the 400,000 contracts HS2 is expected to generate.
The move follows on from HS2 Ltd’s commitment in May to implement faster payments at all levels of the supply chain in response to the pandemic.
HS2 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.”
“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.”
Specialist Engineering Contractors (SEC) Group CEO Rudi Klein said that he applauded the decision. “In recent years we have having a dialogue with HS2 on promoting improved payment security for HS2 supply chains,” he said. “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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