Dashpivot Article – Notice to Proceed Sample

Notice to Proceed Sample

In this article, we will cover the meaning and importance of a Notice to Proceed document in construction, it will answer the question: “when is a notice to proceed issued?” and what are the contents of this notice to know how to write one, plus we have included a Notice to Proceed sample form to get you started.

Notice to Proceed meaning and importance

A Notice to Proceed (NTP) is an official document given to the contractor, permitting them to begin the work outlined in the contract starting from a specific date. This document marks the official commencement of the project and is essentially the green light in construction, it signals that it's time to start work on the project after getting the job.

A Notice to Proceed is a crucial communication that can come from any party that has engaged another party for work on the project. Usually, this is the project owner or developer or the government agency giving the go signal to the contractor or a general contractor instructing a subcontractor to begin their task and begin funding for the project.

When is a Notice to Proceed issued?

Before a construction project begins, the project owner would prepare tender documents which are a set of documents that invites potential contractors to bid for the project described in the tenders.

After the contractor submits a construction bid, and it is accepted by the owner or the agency they can now enter into a series of documentation and contractual agreement and Notice to Proceed is just one of the formal notification for this.

The importance of the notice to proceed is not just for formal announcement of the start of the project but also to ensure there has been a clear communication between the project owner/developer with the contractor before the contractor starts the project.

Note the following documents given before a Notice to Proceed is issued to the contractor before starting the project:

Notice of Award (NOA) or Letter of Award (LOA) – a formal notice or letter informing a contractor that they won the bid and is awarded to notify that they are the chosen contractor. The term “Notice of Award” is common in some countries and has a similar meaning and intent. However, in Australia, these are called “Notice of Acceptance” and in the UK this notification is called “Contract Award Notice” and is given to publish the intention to enter into a public contract. The contractor should receive an NOA first before receiving the Construction Contract and the Notice to Proceed.
Construction Contract – this is the detailed and legally binding agreement between the project owner and the contractor outlining what the works the contractor needs to carry out. This would include: the agreement, general conditions, special conditions, scope of the work, timeline, payment terms, project milestones, specifications, drawings, bill of quantities, payment schedule, and etc. You can explore the sample construction contract found here to see how it is being formatted and outlined covering all the practical and financial obligations, requirements and conditions set by both parties regarding the construction of the project.
Site Possession Letter or Certificate (Certificate of Site Possession) – is also one of the documents received by the contractor before NTP. This certificate records the hand-over of the site to the contractor for constructing the project in terms of the agreement. The term also is varied in different countries the purpose are all the same it gives the contractor the right to enter the site, occupy and use it for the purposes of construction within the duration of the possession.

To summarise, the sequence for the pre-constructions are as follows:

Project owner prepares tender document
Several contractors submit a construction bid and the project owner chooses which contractor they wish to accept
The project owner issues a Notice of Award or Acceptance informing which contractor’s bid they accepted
Both parties will sign a Construction Contract
Project Owner issues a Site Possession Certificate to hand-over the site the contractor can work on at a certain period and finally,
Project Owner issues the Notice to Proceed signaling the contract to begin the project
Project will begin as per contract

As a project owner, preparing these documents are one of the many things you need to tediously prepare on top of the negotiations you have to do before starting a project. This is why we advocate for using a centralised construction management software to streamline the process, reduce paper transaction, manage your documents in a cloud and ensure approvals or necessary signatures are provided accordingly.

Contents of Notice to Proceed

If you are a project owner issuing an NTP or a contractor outlining this to have it signed by the owner, knowing how to make a notice to proceed starts with understanding what are the contents of this documentation, get to know the essential parts so you know what you are signing. The following are some of the necessary parts of the document:

Project Details

This will outline the Project Title and the Project Location and specifies which project the contractors need to work on. On a legally binding document, this enforces which project needs to be completed and enforces the terms.

Contractor details and contract address

These are information within the notice about the contractor specified by the issuing entity i.e. the project owner or project developer. The contractor address in the NTP is necessary to clearly establish the location where the notice is being delivered and ensures that the notice is sent to the right party or contractor.

Start Date and Completion Date

Since the notice to proceed is the go signal needed by the contractor, it should have the start dates when the project is expected to be begin and completed by the contractor. This is necessary to ensure both the owner and the contractor understands the exact timeframe.

Contract Reference

This is the information typically the identification number or code of the Construction Contract that links the Notice to Proceed since an NTP is given only after Construction Contract has been signed. On a standard NTP, this should be alongside the project details.

Statement of Notice

This is the statement in the notice specifying the responsibility that is expected of the contractor. Typically it will also cover that there is a corresponding penalty if the project is not completed within the given time frame. This should have the signature of the owner for authentication.

Acceptance of Notice

This is the part in the Notice to Proceed that states the receipt and acceptance of the contractor with their signature enclosed. It means the contractor formally agrees to the obligation set by the statement of notice in reference to the construction contract already signed prior to the issuance of Notice to Proceed.

Notice to Proceed Sample

Here is a Notice to Proceed sample document made using an app to get you started.

You’re probably wondering what’s the “Filepath” and “Template ID” information in the sample Notice to Proceed provided below? Well, this NTP is created by an app, that allows you to access the file within the software for easy traceability within the management app. Convenient isn’t it? In the sample Notice to Proceed form, you can see that it’s got all the necessary contents: project details, contractor’s details, start date and completion dates (in number of days from start date), statement of notice, signatures and acceptance of notice, and you can also export it to PDF if necessary.

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Digitise your Notice to Proceed Processes

The point of Notice to Proceed is to give a go-ahead to the contractors to start the project and we can all agree that, that’s a straightforward process yet it’s also crucial, if you're manually drafting a Notice to Proceed for every project, this approach can be repetitive and prone to mistake as it's all too easy to overlook. Why don’t you consider upgrading your paper documents to a digital Notice to Proceed form? This will allow you to quickly draft the document, with all the necessary sections easily added by a drag-and-drop system. You can easily update this digitalised Notice to Proceed and open the form for the next contractor to the latest updated version.

In Summary

Wrapping up this article with a summary of what we covered regarding primarily on the Notice to Proceed document, which as we defined the go-signal needed for the contractors to begin the project or to “proceed” with the project and it’s a trigger to begin the funding of the construction. However, we understood first that before a Notice to Proceed is given to the contractor, the project owner have also issued a Notice of Award (NOA), both parties i.e contractor and and project owner/developer have signed a contract with agreed terms, payments, general conditions, etc and then issue a site possession certificate which is essentialy the certificate that states contractors are good to construct in this site on a given period and finally a notice to proceed before the work begins. The flow of pre-construction management sound so straightforward and yet we all know that it’s exhausting and involves a lot of attention to detail so by the end, we encouraged you in this article to adopt digital solutions for your construction business.