Queensland’s revised regulation for managing project finances has been implemented. The Security of Payments Act of 2017 was created to protect payments and retentions within the construction and building industry. It has been modified to provide a simplified approach to account requirements. The Project Trust Account framework is designed to increase the security of subcontractors’ payments in Queensland’s construction and building industry.
This framework applies to all eligible contracts for entities that are part of the state government, hospital, health services, local government, or private sector. The framework requires that head contractors hold the money paid to the project principal in a separate trust account. It is for the benefit and convenience of subcontractors.
Coverage of the Project Trust Account Framework
The project trust account framework generally applies to projects that involve more than 50% of project trust work in which at least one subcontractor has been engaged for the corresponding jobs. Project trust work is the erection, renovation, extension, or alteration of buildings. There are also exemptions for specific contracts and types of work, like projects exclusively for maintenance.
The framework roll-out’s first phase began in March 2021 and covered a limited number of contracts from the state governments. It will expand over time to cover more contractors and contracts. The framework will also apply to eligible contracts starting January 1, 2022
Construction companies must utilize commercial construction estimating software to comply with the trust account requirements as the framework coverage grows. They will need to keep a trust ledger, a record of withdrawals and deposits, a trial balance, and a reconciliation statement. It can be challenging to create and manage these files, whether it is manually or via a general system. These practices have the disadvantage of exposing yourself to errors and possibly missing specific regulatory requirements.
Construction companies can use document management software to manage these records. A builder’s software supports companies with compliance with the new trust account framework. This program allows the company to maintain a separate account ledger for each project. It can record trust account withdrawals and deposits chronologically, along with additional transaction details.
The solution’s automatic data capture from other records makes it easier to prepare the trial balance or bank reconciliation within the specified time. The solution can maintain other documents, including contract amendments and payment schedules.
To know more, here is an infographic from Bizprac.