Olympic construction director says project bank accounts 鈥榥ot appropriate鈥� for large schemes

The Olympic Delivery Authority has ruled out using a pioneering payment practice on large schemes that benefits specialist companies.

Howard Shiplee, the ODA鈥檚 construction director, told MPs at a business, enterprise and regulatory reform select committee hearing last Tuesday that 鈥減roject bank accounts鈥�, a safeguard against non-payment, 鈥渨ould not be appropriate鈥� for use on main Olympic venues.

Project bank accounts permit supply chain payments to be processed through a single account, administered by the client and main contractor, which gives greater assurance of payment continuity. The Office of Government Commerce recommended its use in a Fair Payment Charter this year.

The ODA鈥檚 2012 construction commitments, published in July 2006, also said 鈥渁ll contracts will incorporate fair payment practices including project bank accounts, where practicable and cost effective鈥�.

Now, Shiplee appears to have reneged on that agreement by ruling out the method for the Olympic stadium, the aquatics centre and the velodrome.

He said: 鈥淚t would not be appropriate to intrude on the payment processes of subcontractors that are employed by tier-one contractors.鈥�

Shiplee insisted this did not mean the ODA was unconcerned about late payments. He said: 鈥淲e鈥檙e not turning a blind eye. When we are paying properly, we will ensure tier-one contractors are doing so too. If it is not reflected down the supply chain, we will take a very dim and proactive view on it.鈥�

He said he had not ruled out the use of project bank accounts on smaller projects where a construction management route was used.

Shiplee also disclosed that the Border and Immigration Agency was in talks about joining the police on-site security team.

Tarique Ghaffur, assistant commissioner of the Metropolitan Police, said Olympic construction workers had already been vetted for terrorist connections.

The latest Olympic numbers

  •  The ODA is to let up to 15,000 contracts during the construction of the Olympic park, including 500 primary contracts
  •  85% of the 2,000 workers on site are directly employed
  •  20% of the workers and 25% of the SMEs involved in the Games come from the five London boroughs surrounding the park
  •  The construction of the Olympic park is likely to take up 2% of the capacity of the UK construction industry

Postscript

The PPC2000 and the NEC suites of partnering contract will become the first forms of standard construction contract to include options for project bank accounts when they release new documents this spring.

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