The Queensland government has announced the next phase of the rollout of Project Bank Accounts. Currently the regime applies to building contracts entered into with the Queensland government with a value between $1 million and $10 million.
From 1 July 2020, the scheme is expanded to include contracts provided by a hospital or health service as well as the Queensland government, where the contract value is $1 million or more.
Further phases are also planned, with the aim to apply to all projects with a value of $1 million or more. The full measures are expected to be in place by 1 July 2022.
The changes come after the initial trial phase and an Evaluation Panel report on the effectiveness of the measures in practice. Twenty recommendations were made by the Panel, and the government broadly agreed with these.
Other important changes announced or expected as a result of the recommendations are:
Each head contractor will continue to need to operate a separate bank account per project. These will be renamed Project Trust Accounts (instead of Project Bank Accounts);
A separate retention account will not be required for each project. Instead, a single ‘Retention Trust Account’ will be operated. This will reduce the number of bank accounts required by those who conduct multiple projects;
The previously required ‘disputed funds trust account’ will no longer operate;
Both the Project Trust Account and Retention Trust Account will require mandatory training on how to operate them. These trust records will also need independent external audits;
The QBCC will operate as overseer of the trust accounts, rather than the principal who engages the building work;
The scheme will capture and apply to subcontracting design professionals to improve their security of payment (architects, engineers, surveyors, energy efficiency assessors etc.).
Any business who is currently or is planning to contract with the state government, a hospital or a health service for a project of $1 million or more should immediately start preparing. All other building industry participants should seek advice in the near-term to enable them to understand the effect of the rollout on their business and to allow proper planning and resourcing to deal with the administrative staff time and skills that will be required, as well as the impact to cashflow of having payments pass through this system.