Project Bank Accounts are bank accounts with trust status, from which payments are made directly and simultaneously to the head contractor and subcontractors. 

The purpose of Project Bank Accounts is to protect as far as possible, money paid by the principal to the head contractor for the payment of subcontractors, from being used for other purposes by the head contractor or from any claims made by a voluntary administrator or liquidator in the event of the insolvency of the head contractor.  Information relating to the trial of Project Bank Accounts will be made available on the ProcurePoint website. 

A Government agency undertaking an approved project must ensure that:

• an appropriate level of industry engagement to explain the purpose and operation of PBAs, is undertaken prior to tendering for the project
• the head contractor engaged under a construction contract establishes a bank account that has trust status for all payments made by the principal (the Project Bank Account)
• a trust deed setting out the obligations of the parties relating to the Project Bank Account is executed with the head contractor named as the trustee
• adequate reporting arrangements are in place to evaluate the costs, risks and benefits of the PBA by the Board and
• unless agreed otherwise by the agency head (or delegate) of the agency conducting the trial, that all subcontractors and suppliers engaged by the head contractor are named as beneficiaries under the trust deed.

Government agencies are to utilise the model trust deed drafted by the Department of Finance, Services and Innovation (DFS) for use under the trial.  The standard government construction contract GC21 (edition 2) has been modified to include all necessary references to obligations relating to the trust deed and project bank account, for use by participating agencies.

Information on Project Bank Accounts will be part of advice published at the time of tender for each project.  A tender information session is to be held by participating agencies for each project to ensure that potential tenderers are provided an opportunity to clarify any issues relating to payment mechanisms that will be part of the contract for construction work.  DFS will support agencies participating in the trial in these measures.

Agencies participating in the trial are to ensure that appropriate contract management processes are put in place to effectively manage the relationship with the head contractor.

This Direction is issued by the NSW Procurement Board on 13 November 2013 and takes effect from 1 January 2014 for a period of two years.