project bank accounts - pcpd.scot.nhs.uk · colin judge frics scottish procurement construction...
TRANSCRIPT
Colin Judge FRICS
Scottish Procurement
Construction Policy Unit
Capital Investment Network
Victoria Quay, Edinburgh
15 January 2016
Project Bank Accounts Google - “Scottish Project Bank Accounts”
• Why is the Scottish Government trialling
PBAs?
• Construction Procurement Review – DFM
• Late and extended payment terms - same effect
• What difference does prompt payment
make? • Solvency and investment
• Diversity and competitiveness - VFM
• Spending - multiplier effect
• Cost avoidance - state benefits; tax; capacity/capability
• Independence - corporate and personal
The four trial projects and their current status
A96 Inveramsay Bridge (c£10.17m)
• Transport Scotland
• PBA a condition of tender in amended TS bespoke Design & Build Contract
• on site now, completion due Spring 2016 - PBA payments underway
• Initial lessons learned on PBA set up/implementation gathered and being evaluated
• Another iteration scheduled early 2016 for PBA operation
Transport Interchange, Galashiels (c£5.2m)
• Scottish Borders Council via South East Hubco
• PBA retrofitted into bespoke conditions of contract
• work on site completed August 2015
• Feedback/lessons on PBA being gathered and evaluated
Two separate maintenance work packages at Monklands Hospital (total c£1.4m)
• NHS Lanarkshire via National Services Scotland
• PBA retrofitted into Framework Scotland 2 via NEC3 2005 ‘Z’ clause
• work on site completed September 2014
• Feedback/lessons learned gathered on PBA
• How long is the trial period and what
happens next?
• What is Scottish Government doing? • Website (Google - “Scottish Project Bank Accounts”)
• Lessons Learned Programme
• Frequently Asked Questions and documents
• Policy Leads’ Forum
• PBA banking processes
• Corporate governance and compliance
What is Scottish Government doing
(continued)? • Liaison and reporting within Construction Review
Implementation Programme
• CRDG
• Stakeholder engagement and consultation
• CS - PIG
• Mailbox ([email protected])
• Our key suppliers
• Trade Federations
What is Scottish Government doing
(continued)?
• Trend analysis - follow the money
• Public Contracts Scotland
• Procurement Information Hub
• Broader PBA community
• UK home nations
• Australian states
What are the principal lessons learned - so
far? • PBAs result in prompt and protected payments to
subcontractors
• They are a collaborative endeavour requiring purposeful
action
• The banking sector is the critical enabler
• Our PBA operating model
What are the principal lessons learned - so
far (continued)?
• PBA users need to own the implementation
• Commitment
• Capability
• Complement
• Corporate inertia
• Challenge
• Confidence
• Credibility
• Communication
Traditional
Main
Contractor
(Beneficiary)
Public Body
Project Bank Account
Public Body
Main
Contractor Bank
Account
Sub
Contractor 1
Sub
Contractor 1
(Beneficiary)
Sub
Contractor 2
Sub
Contractor 2
(Beneficiary)
Sub
Contractor 4
Sub
Contractor 3
Typically 1-3 days
Sub
Contractor 3 Non-
Beneficiary
Sub
Contractor 4 Non-
Beneficiary
Project Bank Account
Can be 120 days
Construction Supply Chain Payment Trail
How do PBAs achieve prompt payment?
“Business as Usual”
• Main contractor values his subcontractors’ work.
• Main contractor adds his amount and submits to the public body.
• Public body prepares the interim payment certificate
PBA-Specific
• Main contractor splits into payments due to PBA beneficiaries -
mandate
• Public body deposits money into the PBA - discharge
• Main contractor instructs bank to authorise payment
• Public body then also instructs - only then are beneficiaries paid
• Main contractor still values work but does not control payment
timing
• Beneficiaries receive payment 1 - 3 days after authorisation
What else does a PBA achieve? • the trust deed ring fences money in the account from
insolvency practitioners
What things can a PBA not achieve,
address or change? • deals with “how and when” not “why and what”
• can’t resolve disputes
• payment still in arrears
• tax responsibilities unchanged
What are the essential elements of a PBA in
Scottish Government?
• PBA set up in joint names of public body and main
contractor
• Both named as trustees in the trust agreement
• Jointly instruct the bank to pay beneficiaries from the
account
What is “trust status” in a PBA?
• Main contractor and trustee and beneficiary
• Money is a ring-fenced trust asset while in the PBA
• Trustee role is separate from works contract
• Trustees must control the trust asset (money) - joint
instruction
Which projects are suitable for PBA
application?
• Most projects
• Single contract or call-off
• Multiple payment cycles
• Independent subcontractors
• Not low value
Do PBAs favour larger rather than smaller
main contractors?
• Depends on their business model
• Can price into tender
PBA services by RBS - Scottish Government’s Banking
Services Framework provider
Google “Scottish Procurement Banking”
• Golden Jubilee Hospital (National
Waiting Times Centre Board)
• NHS 24
• NHS Ayrshire and Arran
• NHS Borders
• NHS Dumfries and Galloway
• NHS Education for Scotland
• NHS Fife
• NHS Forth Valley
• NHS Grampian
• NHS Greater Glasgow and Clyde
• NHS Health Scotland
• NHS Highland
• NHS Lanarkshire
• NHS Lothian
• NHS Orkney
• Healthcare Improvement Scotland
• NHS Shetland
• NHS Tayside
• NHS Western Isles
• Scottish Ambulance Service
• The Common Services Agency for
the Scottish Health Service
• The State Hospital for Scotland
What does the bank do?
• The PBA functions as per agreed mandate
• Responds to account holder instructions
• No claim or control of trust asset in PBA
• Won’t intervene in supply chain matters
Must the public body authorise payment
through the banking system?
• Yes!
• Joint instruction - consecutive not concurrent process
• No payment if only instructed by one trustee
How do subcontractors join a PBA?
• Sign the trust documents
• Give bank account details to main contractor
• Join Bankline (RBS’s internet banking platform)
• Bankline “administrator” role needs to be allocated
• No KYC/KYB or direct engagement with bank
What about implementing the PBA
down the supply chain?
• aligning payment cycles
• template payment timeline
• project-specific, not generic
Thank you for listening
• Visit the websites
PBAs - Google “Scottish Project Bank Account”
Framework - Google “Scottish Procurement Banking”
• Drop us a line