Carillion owes suppliers and subcontractors £2bn
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Many subcontractors will be pleased to hear that Project Bank Accounts are used to protect monies on most public jobs.
The use of PBAs is to ring-fence money from the client and protect suppliers’ cash if large contractors like Carrilion got under.
One industry source commented saying: “This is the real acid test for PBAs now as a lot of Carillion’s contracts will have been using them.
“PBAs have certainly helped speed up payments to suppliers but they’ve never seen a test like a firm the size of Carillion going under.”
Many contractors will lose millions held in retentions despite the use of PBA’s.
Many of the suppliers have also been using Carrilion’s Early Payment Facility system which has processed invoices totaling more than £400m which was part of the governments initiative to speed up payments in the construction industry although this has to date been seen as a failure with companies like Carrilion terms 120 day payments Streetwisesubbie shakes up construction payments with charter.
Some subcontractors get paid earlier that the firm’s standard 120 day terms for a small fixed charge.
Payments are also made directly from Carillion’s bankers which should see firms using the system getting the cash they are owed.
During a House of Commons debate yesterday Labour MP Kevan Jones commented saying: “Carillion is notorious in the subcontracting industry as a company that pays its bills very late—over 90 days in most cases.
“The Minister has talked about public sector contractors that will need to be paid, but what support will the Government give small businesses that are in non-Government contracts and are still waiting to be paid?”
Minister for the Cabinet Office David Lidington commented saying: “Companies in non-Government contracts that are not involved in the provision of public services would become creditors of Carillion.”
Ian Anfield, managing director at Hudson Contract commented saying: “To many of us who worked alongside or for Carillion, they were affectionately known as ‘Carry on Construction’ run by accountants rather than engineers and quantity surveyors.
“Sites were hamstrung with so much red tape they could not function as they should.”
Van Elle a piling spicalist is among firms owed money having carried out £1.6m of work in December and January for Carillion on Network Rail jobs which has not yet been paid for.
A spokesman for Van Elle commented saying: “The Group will engage with Carillion and its advisers (including the Official Receiver) to determine the status of outstanding payments.”