HS2 implements PBAs for greater payment protection

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HS2 Ltd is giving more support to companies in its supply chain by approving the use of Project Bank Accounts (PBAs) across key contracts on Phase One

The use of PBAs allows a greater transparency of payments and can speed payments up for companies at all levels of the supply chain. This is because payments are made out of one pot and do not have to cascade through multiple tiers of contractors.

The measure has been welcomed by the construction sector.

Following a successful trial of PBAs on two enabling works contracts, they have been shown to provide an element of protection against insolvencies upstream in the supply chain.

Given that HS2 will generate an estimated 400,000 contracts across its supply chain and that two-thirds of these will be won by small to medium-sized enterprises, this is a significant boost of confidence for the sector.

Economic recovery from the Covid-19 pandemic

At a time of economic uncertainty, due to the Covid-19 outbreak, this is a further step HS2 is taking to provide certainty and assurance for companies in, and aligned to, the construction industry. 

In May, HS2 announced that it was implementing faster payments at all levels of the supply chain in response to the pandemic.

Andy Cross, rail systems procurement director, said: “I am thrilled that we have taken this crucial step to further strengthen our fair payment policies and in so doing, support companies at all levels of the supply chain through the use of PBAs. 

“HS2 will play a critical role in the recovery of the UK’s economy as we emerge from the pandemic, supporting and creating jobs across the construction industry.

“This announcement means that companies, big or small, working with us will feel confident and supported as we work together to build Britain’s new low carbon high speed railway.”

Rudi Klein, CEO of the Specialist Engineering Contractors (SEC) Group, added: “Implementing PBAs now will be a massive boost to construction SMEs struggling to make ends meet as we emerge from the current crisis.

“HS2 will also benefit since PBAs will encourage more collaborative working and help reduce construction costs.

“Given HS2’s decision there’s no longer any excuse for contracting authorities not to use PBAs.”

Government approval for the next stage of the HS2 project was given in April and has meant HS2 contractors now have the go-ahead to start building the new railway.

As the main works civil contractors begin to move into construction and detailed design, a huge amount of new contract opportunities are being made available.

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