Contract variations and project bank accounts
On 1 March 2021, project bank accounts were replaced with a new streamlined trust account framework. Read about the new trust account framework.
The following information only applies to project bank accounts for certain government contracts with tenders released between 1 March 2018 and 28 February 2021.
If building contract variations and amendments occur during a project, the project may then need a project bank account (PBA) even if it didn't need one at the start.
These amendments can include the variation of a contract or change in the contract price.
If a contract amendment or variation changes the nature of the building work or increases the contract price, the head contractor must consider whether a PBA is required.
Decide if a PBA is needed
If a contract amendment or variation occurs, the head contractor should discuss this with the principal or superintendent to decide whether a PBA is needed.
A PBA may be needed if:
- the contract price increases to more than $1 million, including GST, and the total sum of the contract variation is 30% or more of the original contract price
- the scale of residential building work changes to include 3 or more living units
- a head contractor engages a subcontractor where none had previously been intended.
The project doesn't need a PBA if there are fewer than 90 days between the day the variation is agreed and the day that practical completion would occur.
If a PBA is required
If the head contractor determines that a building contract needs a PBA due to variations or amendments, they must set it up within 20 business days of the agreed amendment or variation.
After the contract is amended, the head contractor must comply with PBA requirements from the date of the contract amendment. This includes paying all subcontractors only from the PBA.
If a building contract was entered before 1 March 2021, and a variation means it now requires a PBA, the head contractor may transition straight to the new streamlined trust account framework.
There is no time limit for the transition in this case; for example, a variation could be made 9 months after commencement of the new framework and the head contractor would still be eligible to transition.
The head contractor must discuss the transition with the principal as a contract variation may need to be made.
Read more about the transitional arrangements.