We recently attended the Queensland Building Plan discussion where proposed changes to the building industry were announced and discussed. Once such discussion was the announcement of Security of Payment, which includes the introduction of Project Bank Accounts.
The Project Bank Account (PBA) is designed to create a fair system where progress payments are safely held in trust independent of the head contractor and principal. The aim of the PBA is to ensure payment for work completed by subcontractors. The PBA ensures money’s are quarantined and that the head contractor does not use the fund to pay debts on other projects. The initial introduction of the PBA will apply from 1 July 2018 to all Queensland Government projects ranging from $1m to $10m. It will then be rolled out industry wide and apply to all projects statewide.
The PBA is established by the Principal (Developer) for and on behalf of contractors involved in the project. As progress claims are made by the head contractor the payment is transferred to PBA, payments are then distributed directly to all Subcontractors involved in the project. There is no word yet on how it will be known how much is to be paid to contractors at the various stages of the project.
There is also a suggestion that there will be another account specifically for retentions. Retention monies will be held in the account for the entire period. Currently there is no definition of what a Retention period is, however this will be defined within legislation and will apply across the building industry.
A Trust deed will set out the boundaries of PBA, and the principal will be able to access the account and see how the money has been dispersed. There is no obligation on the principal to have the full proceeds of the development in the bank at the beginning of the project, fund will only be injected as when progress payments are due.
Another proposed change will see more power given to the QBCC. The increased power could allow the QBCC the ability to request further information from Licence holders in the event of a review if needed. One such example given as the discussion would be allowing the QBCC to request bank records for confirmation that the entity has sufficient funds available.
The reform proposal could also see changes to the Home Warranty Scheme, whereby builders who consistently deliver quality have a cheaper home warranty premium. This would also extend to builders who deliver quality work and ensure contractors are paid.
If you would like to discuss the effect of these proposed changes on your business, get in touch with our specialist construction industry advisors. You can contact Marsh & Partners on 07 3023 4800 or at firstname.lastname@example.org
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