Project bank accounts make it “impossible for tier one contractors to generate significant cash surplus on projects”. So said Paul Sheffield, then chief executive of Kier, in 2014. “If your construction business is no longer going to generate the levels of cash that it used to, why would you get out of bed for 1% or 2%?”

One of the first bodies to fully embrace the payment method was Highways England, which started rolling out project bank accounts (PBAs) in 2012 and now uses them unless there are good reasons not to. It estimates PBAs have brought in a 1% cashable saving, as subcontractors no longer have to borrow against what they are owed – and thus their savings are filtered up the supply chain. The roads agency has used PBAs so successfully that other public bodies, from the Scottish government to several Australian state governments, have come to meet its cost intelligence team to learn best practice.

Here we ask Lloyd Biddell, head of cost intelligence at Highways England and architect of its PBA scheme, what project bank accounts are all about. 

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