The Notice to Proceed (NTP) is a foundational document in the construction industry, representing the formal, written instruction from the owner or client to the contractor. This document authorizes the contractor to commence work on the defined project scope. Understanding the function and timing of the NTP is paramount for all parties involved in a construction contract.
Defining the Notice to Proceed (NTP)
The NTP serves as a formal authorization, typically issued by the owner, their architect, or the construction manager, and is a non-negotiable step before any physical construction begins. This official document transforms the contractual agreement from a planning stage into an active commitment to build. The contract documents themselves almost always mandate the issuance of this notice as a prerequisite for project commencement.
The content of the Notice to Proceed is highly specific, clearly identifying the project name, the recipient contractor, and the specific effective date the work is to begin. Issuance of the NTP confirms that all preliminary contractual obligations have been met, allowing the contractor to move forward with confidence. Without this written directive, the contractor risks non-payment or breach of contract. The notice formalizes the owner’s obligation to provide site access and the contractor’s duty to commence performance.
The Legal and Contractual Significance of NTP
The date specified in the Notice to Proceed holds immense weight because it officially establishes the starting point for the project’s contract duration. If the contract stipulates a 365-day completion period, that clock begins ticking precisely on the NTP date, setting the baseline for the substantial completion deadline. The binding nature of this date provides a clear timeline for both the contractor’s performance and the owner’s expectations.
This official start date is the reference point for calculating potential liabilities, most notably liquidated damages. If the contractor fails to achieve final completion by the contracted deadline, the financial penalties outlined in the contract are directly assessed based on the days elapsed since the NTP date. Therefore, the notice acts as the legal trigger that activates all time-sensitive clauses within the construction agreement.
Critical Activities Required Before NTP
Before the owner can issue the Notice to Proceed, the contractor must successfully navigate a series of pre-construction compliance requirements and approvals. One mandatory step is the securing of all necessary local, state, and federal permits and licenses required for the scope of work. Without these regulatory approvals, which often involve sign-offs from multiple municipal departments, the owner cannot legally authorize the start of construction, irrespective of the contract terms.
The contractor must also submit the final, approved baseline schedule, which serves as the benchmark for measuring progress. Providing proof of insurance, including general liability and builder’s risk policies, and the delivery of performance and payment bonds are prerequisites. Failure to finalize and receive approval for these documents, which also include various pre-construction submittals like safety plans and material samples, will delay the formal issuance of the NTP.
Practical Effects: Mobilization and Project Commencement
The moment the Notice to Proceed is formally delivered and accepted, the project transitions from a planning exercise to an active construction site. This immediate shift triggers the contractor’s mobilization phase, which involves a flurry of physical and logistical activities, often requiring significant upfront capital expenditure. Heavy equipment, materials, and construction personnel are moved onto the site to establish the operational infrastructure.
Setting up temporary facilities is a primary focus during mobilization, including jobsite trailers, temporary utility connections, and site security measures. Initial site preparation, such as clearing and grubbing or establishing erosion control measures, also begins immediately. The NTP marks the transition from contractual paperwork to physical construction activities, turning the site over to the contractor’s control.
Full NTP Versus Limited Notice to Proceed
Construction projects often utilize two distinct forms of authorization: the Full Notice to Proceed and the Limited Notice to Proceed (LNTP). A Full NTP grants the contractor permission to execute the entire scope of work defined within the signed contract documents. This is the standard authorization that fully activates the contract duration and all associated performance obligations.
The Limited Notice to Proceed, however, is a strategic tool used to accelerate complex or time-sensitive projects. An LNTP restricts the contractor to performing only specific, narrowly defined tasks, such as ordering long-lead materials like specialized equipment or structural steel. It may also authorize preparatory activities like initial site demolition or geotechnical investigation, often allowing this work to proceed before the full contract duration clock officially begins.
Managing Delays and Contract Impacts
A significant risk arises if the owner fails to issue the Notice to Proceed by the date mutually anticipated during the contract negotiation phase. Such an owner-caused delay can have substantial financial consequences for the contractor, who may have already committed resources and personnel to be ready on the agreed-upon date. In these situations, the contractor is often entitled to file a claim for an Extension of Time (EOT) to adjust the substantial completion date forward by the number of days of the delay.
Beyond schedule relief, the contractor may also seek compensation for delay costs, including extended general conditions, jobsite overhead, and material cost escalation. Formal documentation, such as written requests and change orders, is paramount to maintain a clear contractual record and justify cost recovery. The concept of constructive NTP, where a contractor informally starts work without the official notice, is a dangerous practice. This voids the formal start date and complicates future delay claims and liability assessments, leaving the contractor exposed.