By now, most contractors have heard of the Project Trust Accounting framework, but they may not have had to put it into action within their own companies just yet.

While the framework was originally established in 2018 as a way to strengthen the security of payments to subcontractors and suppliers, it has only been required for a small range of state government contracts – typically those above AUD $10 million.

But that’s about to change as Queensland will be applying the framework to cover all eligible private, local government, statutory authorities and government-owned contracts valued at AUD $3 million or more starting 1 March 2025, and those valued at AUD $1 million or more starting 1 October 2025.

While each state and territory has slightly different compliance requirements, the framework typically requires that general contractors hold money in a separate account with enough cash available to cover invoice payments and retention held, helping ensure that subcontractors and suppliers are paid on time.

Meeting these requirements for dozens if not hundreds of contracts will be enormously time consuming, requiring contractors to completely change how they conduct their businesses. Thankfully, there are several business practices and technology solutions available to help them modify their operations so that they can provide the reporting necessary to be compliant by 2025.

Modify Key Business Workflows

As any business can attest, change is hard, especially when it involves modifying people-based processes. Yet these are the most vital workflows to change given that the framework requires that contractors create, monitor and maintain unique bank accounts for each project, which involves a host of new tasks that weren’t previously a part of normal business operations.

Below are a few processes that can be helpful to implement well before any auditing commences:

• Set up a new monthly process workflow. Contractors should expect to be audited regularly, with as many as eight new reports required per project. In order to ensure compliance, contractors should establish a new monthly process workflow that covers everything from always ensuring there’s enough cash on hand, to moving retention to the correct trust accounts on time.
• Streamline the number of steps. The new monthly process workflow should ideally minimize the number of steps required each month so that the tasks are as easy as possible to manage. For example, enforcing retention release by separate claims or consolidating to one payment per month can streamline how bills are paid out so that it’s done at the same time every month using the same process.
• Reconcile qualifying projects monthly. Qualifying projects should be reconciled monthly (at minimum), to help management keep an accurate gauge on project financials. Doing so will enable issues to be caught and rectified early on, ensuring that any and all projects can be successfully audited at any time.

Invest in Project Management Tools to Automate Reporting

Once new business workflows are in place, it can also be helpful to invest in financial, operations and project management tools that are specifically designed to help contractors produce the reports required to be compliant.

These tools can be enormously helpful as many have PTA-compliance productivity tools built-in, which cover the various state-by-state variations, while also allowing for future changes as requirements continue to be modified.

When exploring different solutions, check to see if they have these important features:

• Automated tools to flag qualifying projects and agreements
• Streamlined payment administration, including tools that allow contractors to pay from the correct cash accounts at the right time
• Retention transfer automation
• Automation of “separate” PTA and RTA ledgers
• Vendor statements and compliance audit reporting at the touch of a button
• Cash account and treasury management enhancements
• Reconciliation tools and true-up facilities

Implement Sound Accounting Practices

While the specific legislative requirements for each region and territory may differ, there are several accounting practices that can help contractors reach compliance regardless of their location.

These include:

• Pay qualifying invoices on or before the due date. The beneficial interest for retention is activated at the due date of the invoice and must be moved to RTA at that time. Transferring retention prior to payment is harder to manage.
• Use RCTIs where possible and ensure the RCTI invoice date reflects the SOP delivery date. This will ensure the PTA ledger reflects the beneficial interest from the date of SOP issue.
• Ensure retention transfers are made using trust journals of the beneficiary line type. This will ensure the correct sequencing in the record of deposits and withdrawals. Be sure to also complete your physical EFT retention transfers on the same day.
• Put a policy into place where retentions are released as retention-only claims. This makes payment administration easier and means less true up’s.
• Enter fees and interest as direct debits to ensure they’re captured under the trustee beneficiary. Use trust journals of the trustee line type for top ups and draw down’s.
• Consider using the new flexible payments terms functionality for accurate due dates.

Finally, don’t delay – 2025 will be here before you know it, and most contractors will need plenty of time to adequately prepare to be compliant, particularly when you consider the people, processes and technology changes involved. Starting the process now can help contractors put the right steps in place, helping ensure they’re compliant well before the deadline and stay compliant afterwards as well.

Andrew Tucker is the Product Manager APAC at Trimble Viewpoint, a connected construction management software leader whose SaaS solutions help contractors around the world operate more efficiently, safely, sustainably and predictably.