Organisation is the latest body to adopt government plans to combat payment abuse

The Highways Agency has become the latest major client to adopt project bank accounts after deciding to use them on its £1.3bn pipeline of capital projects.

The public sector giant will apply the payment method “where appropriate” on 14 major projects over the next four years.

The decision follows a successful trial of the system on the development stage of the agency’s £106m programme of works on the A11.

Project bank accounts allow clients to pay all contractors and subcontractors directly from a single pot, eliminating payment disruptions down the chain.

Tim Eaton, commercial director at the Highways Agency, said: “Our trial proved successful and we have decided to use the method on future projects where it is appropriate.

“It stops some of the problems of lower tier suppliers struggling and waiting to get paid. We also get intelligence about the shape of our supply chain, what we are paying and who is doing what.”

The agency’s move comes as the government presses all public bodies to adopt project bank accounts.

In November, the government made the use of project bank accounts a requirement of public construction projects.

Earlier this month Defence Estates confirmed that it will use the payment model on future developments. So far there are 12 organisations, including Crossrail, which have adopted the system.

Rudi Klein, chief executive of the Specialist Engineering Contrators’ Group, said: “Project bank accounts are the best answer we have to date of dealing with all types of payment abuses. It gives clients no excuses for delaying payment.

“We are seeing now a real momentum towards the use of project bank accounts. It’s a massive leap forward and it will change the mind-set of the industry. It will mean they can cast aside the worries about payment and concentrate on the delivery of projects.”

Project bank accounts could be used on the agency’s projects as early as the end of this year.

Hear more from the Highways Agency at the UK Infrastructure Forum - Delivering Sustainable Transport conference on 24 March 2011, London. Click here to find out more and to register…