A revised regulation regarding the management of project finances is now implemented in Queensland. The primary goal of the Security Payments Act of 2017 is to strengthen the security of payments to subcontractors in the country. A streamlined approach to fulfilling account requirements in the construction and building industry.
The Project Trust Account framework applies to the following entities eligible for contracts and is under the state government:
- Hospital and health services,
- Local government, and
- Private sectors.
Under this approach, through document management software, head contractors are mandated to safe keep the money paid by the project principal in an isolated trust account to benefit the subcontractors. Eligibility of contracts, however, will be based on a set of criteria.
What is a Project Trust Account?
It is when a third party—let’s say a bank—holds the fund for another party. Generally, it has two types: the retention trust and the project trust account. A retention trust account is suitable for pending cash retention until they become payable. It protects employers if a contractor’s work becomes nonconforming or defective.
On the other hand, a project trust account is a financial account where the fund is kept until payments for a building project are due. It will be held for the benefit of contractors and subcontractors. To monitor this, it is suggested that construction project management software be used to monitor the said fund.
Coverage of the Project Trust Account Framework
Last March 2021, the framework’s first phase was implemented to provide attention to small-range contracts under the state government. On January 1, 2022, the framework expanded and is now applicable to eligible contracts like hospital and health services (having a value of at least AUD $1 million,) private sector, local government, statutory authority, and government-owned corporations (with a value of AUD$10 million or more) all having contracts with the state government.
As for smaller contractors in the construction and building industry, more time is given to prepare for the final phase of the Project Trust Account expansion. This will start on April 1, 2023, when all eligible contracts having a value of AUD $3 million or more will be expected to comply. Eligible contracts valued at AUD $1 million or more are expected to also comply by October 1, 2023.
Being compliant in the construction and building industry is a way to protect not only the company but also its employees. To better monitor trust funds, software like Bizprac Construction and Estimating Software for Builders may be of big help. Be in the loop with the expansion of the Project Trust Account by checking out this infographic by Bizprac.