What are project bank accounts?

Project bank accounts are ring-fenced bank accounts set up for construction projects, where the purpose of the account is to make payments directly to the contractor, sub-contractors, key members of the team and supply chain (which may include Consultants) on contractually agreed dates. The parties further down the construction chain do not have to wait for the contractor or other party above them in the contractual chain to pass on payment to them—payment is made directly by the bank at the same time as payment is made to the contractor. These arrangements offer the supply chain security that payments will be made without delay, and that payments properly due will be protected if the Main contractor becomes insolvent.

Project bank accounts are more likely to be used in higher value projects—given the set-up and administrative Costs, and potential need to train the team who are unfamiliar with such arrangements, parties may see them as inappropriate for smaller projects (a review by one large contractor in 2014 confirmed this, suggesting that they were only suitable