Project bank accounts: the second wave of security of payment?

Abstract

Purpose

The purpose of this study is to identify building contractors’ views as to the need for, impact of and barriers to the use of project bank accounts (PBAs) in the UK construction industry.

Design/methodology/approach

A cross-sectional research study was carried out by the use of questionnaires to collect quantitative data. The population for the research was of construction professionals working as full-time employees for either main (Tier 1) or specialist contractors (Tiers 2-4).

Findings

Contractors consider PBAs as an effective initiative to encourage fair payment. There is uncertainty, however, as to whether PBAs will result in project cost savings. Head contractor resistance is perceived to be the biggest barrier to the use of PBAs. Adoption of PBAs in private-sector construction projects is likely to be slow.

Research limitations/implications

The relative infancy of PBA usage in the construction industry means that responses are largely based on awareness as opposed to experience. Nevertheless, survey data represent a snapshot of contractors’ perceptions with respect to PBAs, which may be used as a benchmark against which to compare future studies to monitor how contractors’ views and expectations have changed with time.

Originality/value

The survey results will be of particular interest to those international jurisdictions who are considering, or who have already embarked on, the path of trialling and/or using PBAs in the public sector.

Citation

Griffiths, R., Lord, W. and Coggins, J. (2017), "Project bank accounts: the second wave of security of payment?", Journal of Financial Management of Property and Construction, Vol. 22 No. 3, pp. 322-338. https://doi.org/10.1108/JFMPC-04-2017-0011