Quick answer

A project bank account pays subcontractors directly and promptly from a single account the employer funds, speeding payment down the chain, but it does not resolve disputes over value or set-off, and on the main contractor insolvency the money would ordinarily be frozen and shared among unsecured creditors unless the account trust status is upheld, a point not yet tested in court

A project bank account pays subcontractors directly and promptly from a single account the employer funds, speeding payment down the chain in place of the long payment periods common in the industry. It does not change certification, and it does not resolve disputes over the value of work or rights of set-off. Its weak point is insolvency: on the main contractor's insolvency the money would ordinarily be frozen and shared among unsecured creditors who rank equally, as the central-fund arrangement in British Eagle International Airlines Ltd v Compagnie Nationale Air France was held incompatible with the insolvency rules, leaving each subcontractor only a fraction of its entitlement. To meet this the account is given trust status, the money being held in trust for the payment chain, and it is intended that the trust will take precedence over the insolvency rules, though no reported decision has yet tested whether it does. The arrangement suits larger projects with subcontractors on monthly terms, and a standard agreement published in 2009 is available for use on JCT contracts.