Project Bank Accounts (“PBAs”) have been used on WA Building Management and Works (“BMW”) projects worth $1.5m to $100m for about 8 months. WA Premier, the Hon. Mark McGowan is looking at expanding the scheme to apply to private construction works as well. Queensland Premier, the Hon. Annastacia Palaszczuk is looking to introduce the scheme for government projects in that State.
Perhaps not surprisingly, larger construction contractors and their spokespersons oppose plans to expand the operation of the scheme, citing excessive paperwork and compliance costs. Despite objections, the scheme may be seen as justified by the failure of adjudications, Personal Property Securities registrations and “fair value” claims to provide subcontractors with other options for recovering payment from insolvent head contractors.
Objections to PBAs seem to echo opposition to recent reforms of WA’s Construction Contracts Act (CCA): in particular, the introduction of provisions said to give contractors a right to “recycle” payment claims. However, such opposition appears equally questionable, once it is recognised that any supplier of goods or services is entitled to reissue incorrect invoices without losing their right to enforce payment.
Perhaps of greater concern than the extra paperwork is how a mandatory PBA scheme operating in private projects might interfere with the parties’ freedom of contract, a question that does not seem to have been debated to any significant extent so far.