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Payment revolution in welsh construction

Last year’s collapse of Welsh-based company Dawnus Construction has hastened progress towards protecting SME payments in Welsh construction.

In December 2017 Mark Drakeford, then cabinet minister for Finance, launched a new project bank account policy “to support ethical business practices in government funded construction.”

All government funded projects in Wales above a £2 million threshold are required to have a project bank account (PBA). This enables all firms in the supply chain to be paid from one ‘pot’ without payments having to cascade through the different layers of the supply chain. The monies are ring-fenced so that if there is an insolvency upstream small firms in the supply chain don’t lose out; in the Dawnus collapse almost £40 million was left owing to Dawnus’s supply chain.

At a recent event hosted by SEWSCAP, councils and contractors came together to determine how best to implement the policy on PBAs. Those who had already used PBAs indicated that they helped to ensure that payments to SMEs in the supply chain were discharged well within 30 days as well as being made secure.

Speaking on behalf of SEWSCAP, Kevin Shackson (who chaired the event), said he was delighted with the progress being made on using PBAs: “It’s such a commonsensical thing to do.  Most of construction in Wales is actually delivered by small firms. They deserve proper payment protection since they provide a range of community benefits including local jobs and training.”

Speaking at the event Luke Owen, managing quantity surveyor at Morgan Sindall’s Cardiff office said: “As a large tier one contractor we fully support PBAs. Contrary to various adverse reports the costs and administration involved in setting up and operating them is minimal. On the positive side we find that they help to improve the performance of our supply chain.”

“We are grateful to SEWSCAP for bringing together public sector authorities, contractors, consultants and sub-contractors to work collaboratively to implement PBAs in South East Wales.”

Another speaker, Matt Curtis from Vale of Glamorgan Council, urged all councils to use PBAs: “The Vale of Glamorgan Council is an early adopter of PBAs as part of our 21st Century Schools Programme. We were surprised to find the processes involved were very straightforward and have assisted with streamlining our overall payment process. The key is working in partnership with the contractor from the outset.”

Cat Griffith-Williams, national executive officer for the Specialist Engineering Contractors’ (SEC) Group Wales (representing engineering SMEs in Welsh construction) added: “Feedback from firms which have experienced PBAs has been amazing.  They don’t have to wait months to get paid and they can commit to their work in the knowledge that their monies are secure.”

27 January 2020


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