The Notice to Proceed Is the Official Signal That Construction Can Begin
After a construction contract is executed - signed by both owner and contractor - the contract time does not necessarily begin immediately. In most construction contracts, the contract time begins when the owner issues a Notice to Proceed (NTP) to the contractor. This separation between contract execution and NTP issuance allows the owner and contractor to complete several prerequisites - obtaining bonds, establishing insurance coverage, submitting the schedule, and completing pre-construction submittals - before the clock on the substantial completion deadline starts running. Understanding the NTP sequence and what must happen before and after it is part of the ARE CE content area covering the post-award phase of construction procurement.
Pre-NTP Requirements
Before the owner issues the NTP, the contract documents typically require the contractor to provide: a performance bond and a payment bond (both equal to 100% of the contract sum, from a surety company acceptable to the owner); certificates of insurance showing the required coverages (general liability, workers' compensation, umbrella/excess liability, and any project-specific coverages required by the contract); an initial project schedule (typically required within a defined time period after contract execution, often 7-21 days, and reviewed before or concurrent with NTP); and a list of proposed subcontractors (if required by the agreement). Some owners also require submission of the safety plan, a preliminary submittal log, and the contractor's key personnel names before issuing NTP.
Contract Time and the NTP
Under most AIA contracts, the contract time is measured in calendar days from the date fixed in the NTP. This means: if the contract says substantial completion is 365 days from the NTP, and the owner issues the NTP on February 1, the substantial completion date is February 1 of the following year. If the contract specifies a fixed substantial completion date (a date certain rather than a number of days), the NTP still matters because late issuance of the NTP relative to the assumed start date may entitle the contractor to a time extension. An owner who delays issuing the NTP while the contractor is ready to mobilize may cause the contractor to incur costs (holding the bonded crew and equipment, keeping the schedule open) that are recoverable as delay damages.
Mobilization
Upon receiving the NTP, the contractor mobilizes - establishes the construction site and begins preliminary work. Mobilization activities include: erecting temporary fencing, site office trailers, and signage; establishing temporary utilities (power, water, phone/data); setting up sanitary facilities; conducting the pre-construction meeting with the owner and architect; and beginning site work or demolition if applicable. The contract documents may specify a mobilization period (a number of days before the contractor must demonstrate visible progress in the permanent work), or progress may be measured against the accepted baseline schedule from the outset.
Key Exam Points
- NTP: official directive from owner to contractor to begin work; initiates contract time (unless fixed date is specified).
- Pre-NTP: performance bond, payment bond, certificates of insurance, baseline schedule, subcontractor list.
- Performance bond: guarantees contractor will perform the contract; payment bond: guarantees payment to subcontractors and suppliers.
- Late NTP: owner-caused delay that may entitle contractor to time extension and delay costs.
- Mobilization: first activities after NTP - site setup, temporary utilities, pre-construction meeting.
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