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Testing the waters of the wrong ocean

Michael Chesterman
Michael Chesterman March 7, 2018

On 1 March 2018 the operation of Project Bank Accounts (PBA’s) commenced in relation to government projects valued at between $1 million and $10 million, excluding engineering projects.

Information contained on the Department of Housing and Public Works (DHPW) website indicates that in relation to PBA’s:

Following successful implementation, this model is set to apply to private sector projects valued from $1 million. However, this will not occur before 1 March 2019.”

In his second reading speech, Minister de Brenni stated:

“In fact, the minimum one-year gap between public sector implementation and private sector implementation was deliberately included in the legislation because this kind of evaluation is obviously a desirable thing when introducing new laws.”

As I indicated in a previous article entitled ‘Project Bank Accounts are happening but will your job have one?, approximately $11.5 billion of the $46 billion building and construction industry will be covered by PBA’s if they are rolled out to the private sector.

In my view, even if the review process for the implementation of PBA’s for government contracts finds the model for this purpose was successfully implemented, that in itself should not be justification to proceed and impose PBA’s on captured private sector projects.

I say this for the following three main reasons.

  1. DHPW, on behalf of the Queensland Government, administers a system of prequalification for contractors in the building and construction industry known as the Prequalification (PQC) System. Contractors must first be prequalified and appropriately registered on the PQC System to be eligible to compete for any Government building project estimated to exceed $1,000,000 in value. These PQC requirements are over and above the QBCC licensing requirements and are very comprehensive. One major point of difference is that the PQC financial requirements are much tougher than the QBCC licensing financial requirements. This means that contractors that will be tendering for government projects where PBA’s will be applicable are not representative of many other licensed contractors.
  2. DHPW stipulate that only certain widely used standard form contracts will be utilised in relation to the operations of PBA’s on government projects. Obviously, this will not be the case with private sector projects.
  3. DHPW will select superintendents to administer PBA’s projects that understand their responsibilities to act in a responsible manner when deciding payment entitlements of contractors. Again, this will not necessary be the case with private projects.

If you are unsure about how Project Bank Accounts will impact you and your business please get in touch. We offer training and support tailored to your specific circumstances. Helix Legal is hosting “Bracing for High Tech Future” on 27 March 2018, come along and join the conversation about the future of the construction industry.

Not intended as legal advice. Read full disclaimer.
Michael Chesterman
Michael Chesterman March 7, 2018

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