Brown launches payment pilot to benefit construction industry

Representatives from across Scotland’s construction industry today attended an industry briefing event for the A96 Inveramsay Bridge Improvement Project - the first Scottish road infrastructure project to use an innovative payment mechanism to help improve cash flow within the construction sector.

Keith Brown, the Minister for Transport and Veterans, addressed more than 70 construction delegates at the event held by Transport Scotland in Edinburgh.

The PBA event outlined how Scotland’s Transport agency intends to operate the new payment mechanism on the A96 Inveramsay Bridge Improvement Project and highlighted the significant benefits of PBAs to the Scottish economy at both local and national levels.

Speaking at the event, Mr Brown said:

“Infrastructure investment boosts growth and the prompt payment of firms working in our construction supply chains has a crucial part to play in easing cash-flow and enabling those firms to make their contribution to the overall Scottish economy.

“Project Bank Accounts have the potential to make the difference between sub-contractors of any size becoming insolvent or staying afloat, help preserve capability, competitiveness and diversity within the construction industry, and help build greater resilience into the broader Scottish economy.

“We have been encouraged by the positive feedback from industry leaders keen to learn more about PBAs and are confident this pilot will lead to greater transparency, collaboration and innovation between the Scottish Government and the construction industry.”

The event follows the announcement by Deputy First Minister, Nicola Sturgeon, in April 2013, of the Scottish Government’s intention to trial PBAs on a variety of projects to speed up payments to the supply chain, following the recommendations made in the Review of Scottish Public Sector Procurement in Construction.

PBAs are ring-fenced accounts from which payments can be made directly and simultaneously by Transport Scotland to the main contractor and members of the supply chain, with the aim of improving cash flow through the supply chain.

By creating this direct cash flow from public bodies to subcontractors, PBAs will increase payment certainty and tackle the problems of late payment reported by some in the industry.