Upload
elinor-terry
View
216
Download
0
Embed Size (px)
Citation preview
Department of Finance
Building Management and Works
Trial of Project Bank Accounts
2014
Building Management and Works
Outline
Project Bank Accounts (PBA)o Trial project bank accountso About PBAso Key processeso Development of the PBA modelo The Trial
Building Management and Works
The trial of Project Bank Accounts
On 26 June 2013, the Government announced the trial of Project Bank Accounts (PBAs) on BMW administered projects
PBAs provide greater transparency for the principal (and greater security of payment for subcontractors); and
The results of the trial will be used to inform future decisions on a more widespread adoption
Building Management and Works
About Project Bank Accounts
A project bank account is
o A project-specific bank account (set up by a head contractor) that is operated consistent with a trust agreement
o An alternative payment mechanism, not an alteration of the rights and responsibilities of the parties to a contract
Project Bank Accounts have been the default position in United Kingdom government construction projects since 2011
Building Management and Works
About Project Bank Accounts
Parties paid through the project bank account
o The head contractor
o Subcontractors directly appointed by the head contractor to undertake works valued in total greater than $20 000
o Subcontractors directly appointed by the head contractor to undertake works valued in total less than $20 000 who choose to opt in to the project bank account
o Suppliers who choose to opt in to the project bank account
Building Management and Works
About Project Bank Accounts
Process Overview
o Once the monthly payment amount is determined, the head contractor determines how the amount should be distributed.
o The principal deposits funds into the account, which are distributed to the head contractor/subcontractors simultaneously
o Retention funds are deposited into a dedicated account, which are retained then later released in accordance with subcontract agreements
o The principal has “view rights” into the bank account
Building Management and Works
About Project Bank Accounts
Benefits of Project Bank Accounts
o Enable subcontractors to better protect themselves in the event of head contractor insolvency (subject to the PPSA)
o Speed up the payment process for parties lower down in the supply chain and redistribute payment risk
o Increase transparency and accountability in the payment process
Building Management and Works
About Project Bank Accounts
PBAs do not prevent head contractors from:
o managing the performance of subcontractors,
o withholding payments, if obligations are not met, or
o seeking adjudication or commencing legal action in the event of a dispute
Building Management and Works
About Project Bank Accounts
Establishes the Trust and outlines how the PBAs will operate for all participants.
Instructs the bank how to administer the PBAs
The construction contract between the Principal and Head Contractor (modified)
Key documents:
Building Management and Works
How a Project Bank Accounts is set up
Building Management and Works
Payment Process – Step by Step
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s RepSuper’s Rep
BANK (PBA provider)
General Account
Retention Account
Building Management and Works
1. Subcontractors Claim Payment from Head Contractor
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s RepSuper’s Rep
BANK (PBA provider)
General Account
Retention Account
Building Management and Works
2. Head Contractor Submits Payment Claim to Superintendent’s Representative
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s RepSuper’s Rep
BANK (PBA provider)
General Account
Retention Account
Building Management and Works
3. Superintendent’s Representative Assesses Claim and Issues Payment Certificate to Head Contractor and BMW
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Within 14 days of Contractor lodging payment claim
Super’s RepSuper’s Rep
BANK (PBA provider)
General Account
Retention Account
Building Management and Works
4. Head Contractor Submits Progress Payment Instruction to Bank (Copy to SR) and issues a modified Statutory Declaration and Monthly Report to SR
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Within 5 Days of Payment Certificate being issued
Super’s RepSuper’s Rep
BANK (PBA provider)
General Account
Retention Account
Building Management and Works
BANK (PBA provider)
5. BMW Deposits Payment into General Project Bank Account – Unless there are Anomalies with the Statutory Declaration
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Super’s RepSuper’s Rep
General Account
Retention Account
Building Management and Works
BANK (PBA provider)
General Account
Retention Account
6. Bank (Simultaneously) Pays Head Contractor, Subcontractors, and Retention Account as Specified in Payment Allocation
Subcontractor #1
Subcontractor #2
Subcontractor #3
Subcontractor #4
Supplier #1
Head Contractor
Within 28 days of Head Contractor lodging payment claim
Super’s RepSuper’s Rep
Building Management and Works
Development of the Project Bank Accounts Model
Contributors:o The Master Builders Association [and individual members]o Key subcontractor associationso Deloitte Touche Tohmatsuo The Commonwealth Banko The State Solicitor’s Office, Minter Ellison and the New South
Wales Government
Building Management and Works
The Trial
Demonstration Projects:o The trial includes seven capital works projects with a range of values
and metropolitan and regional locationso Projects are undertaken through the AS2124 construction contract by
BMW prequalified head contractors
Bank Arrangements:o The PBAs for the trial are established with the Commonwealth Bank