Project Bank Account

Definition

A Project Bank Account (PBA) is a standalone bank account set up to receive and distribute payments for a specific construction project. It is typically held in trust for the project’s beneficiaries, with joint signatories from both the client and lead contractor, ensuring payments are made directly to the supply chain without passing through the contractor’s general accounts.

Why it matters

PBAs improve payment security and transparency, addressing one of the construction industry’s major risks - delayed or non-payment. They help ensure that funds are only used for the project in question, protecting subcontractors from upstream insolvency.

In the UK, PBA's are promoted by government and industry bodies, and are mandated for certain public sector projects.

How a Project Bank Account works

1. Set-up – A dedicated account is opened, usually in the joint names of the client and lead contractor, and governed by a trust deed.
2. Funding – The client deposits certified payment amounts into the account following each valuation.
3. Direct payment – Funds are paid out directly and simultaneously to the lead contractor and named subcontractors.
4. Transparency – All parties can see when funds are deposited and released, reducing disputes and improving cash flow.
5. Closure – The account is closed at project completion, with any remaining balance returned according to the trust deed.

Examples and use cases

• Public sector projects – Schools, hospitals, and infrastructure works.
• Large private sector developments – Commercial buildings, super-prime residential developments and mixed-use schemes.
• Joint ventures – Multi-party developments with shared risk and trust requirements.

Mini-FAQ

Q: Is a PBA the same as a retention deposit account?
A: No. A PBA covers all project payments, whereas a retention deposit account holds only retention sums.

Q: Who controls the PBA?
A: Typically joint signatories (client and lead contractor), with the account operated under a trust deed for the named beneficiaries.