What is a project bank account?
The Building Industry Fairness (Security of Payment) Act 2017 (Qld) introduced new rules that require head contractors to set up project bank accounts (PBA) for certain projects. The PBA regime is designed to ensure that subcontractors are paid for the work they do.
The PBA’s structure and strict rules help subcontractors:
- get paid regularly in a timely manner
- protect their retention and disputed monies.
Building Industry Fairness Reforms
The Queensland Government has accepted or accepted in-principle all of the recommendations made in two independent reports into building industry fairness reforms, published by the Building Industry Fairness Reforms Implementation and Evaluation Panel and Special Joint Taskforce.
In its response, the State Government stated that the recommendations provide a balance between enhancing the legislative framework for better impact and commencing the reforms in the private sector to extend protections more widely.
Timeframe for roll-out of PBA reforms
The PBA requirements already apply to government projects tendered after 1 March 2018 that are valued between $1 million and $10 million. The next steps of the rollout will be to expand PBAs to:
- government building projects above $1 million, including Health and Hospital Services from 1 July 2020;
- building projects above $10 million from 1 July 2021;
- building projects above $3 million from 1 January 2022; and
- building projects above $1 million from 1 July 2022.
Other key changes
Some of the other notable changes to the PBA framework include:
- the removal of the requirement for a disputed funds trust account;
- the ability for subcontractors to issue a payment withholding request on the principal that is withholding cash retentions;
- the replacement of the requirement for a retention trust account (RTA) with the creation of a retention trust account by all contractors in the contractual chain and any private sector principals withholding cash retentions;
- a requirement for all contractors in the contractual chain and any prescribed person wishing to hold retentions to undergo compulsory training and assessment on the management of a RTA by a specified time;
- additional powers for the QBCC to monitor and enforce compliance with RTA requirements, freeze RTAs, and administer a RTA in certain circumstances; and
- the removal of the ability for a principal to replace the head contractor as trustee of the PBA on insolvency of the head contractor or termination of the contract.
For further information on the changes to the PBA framework, please contact:
Andrew Kelly | Partner | +61 7 338 7550 | [email protected]