The Scottish Government has paved the way for a dramatic increase in the use of project bank accounts by slashing the project value threshold in half.
From 19 March, public bodies must include a PBA in tender documents for public works building contracts worth £2m and over and civil engineering projects worth £5m upwards.
When project bank accounts were first made mandatory in Scotland back in October 2016 they were required on projects over £4m and civil engineering projects valued over £10m.
Under PBAs, payments are ring-fenced in one pot to protect them from main contractor insolvencies and payments can be made to all parties within 12-15 days.
Main contractors are exempted if 75% of the work is carried out in-house or by associated firms.
The Specialist Engineering Contractors’ Group Scotland welcomed the move.
Its National Executive Officer Alan Wilson said: “We have been pressing Scottish Government for some time to reduce the threshold to £2m.
“Clearly Scottish Government has been listening and industry SMEs will be the prime beneficiaries of this lowering of the threshold.”
The Scottish Government is also stepping up its efforts to encourage all bodies involved in public sector procurement to implement PBAs.