Contract documents

March 1, 2024

There is no set way to schedule a project. Each project requires a different schedule based on the characteristics of the job. This article will take a look at language found in A201- 2017 General Conditions of the Contract for Construction and A101-2017 Standard Form of Agreement between Owner and Contractor and highlight some the key considerations to make when setting the date for the commencement of the Work in the project schedule.

Contract Terms

Before discussing key considerations, it is helpful to look at some of the relevant agreement terms. The general conditions related to the project schedule are mainly found in Article 8 of A201-2017. For example, Section 8.1.1 of A201-2017 defines Contract Time as “the period of time, including authorized adjustments, allotted in the Contract Documents for Substantial Completion of the Work.” Then, Section 8.2.1 states, in relevant part that, “[b]y executing the Agreement, the Contractor confirms that the Contract Time is a reasonable period for performing the Work.”

The specifics related to Contract Time are mainly found in Article 3 of A101-2017. This article focuses on one of those specifics – the commencement date. Specifically, Section 3.1 of A101-2017 allows the parties select whether the commencement of the Work will be (i) the date of the Agreement; (ii) the date set forth in a notice to proceed issued by the Owner; or (iii) established by another specific date or means to determine the date. Then, Section 3.2 of A101-2017 states the “Contract Time shall be measured from the date of commencement of the Work.”

Key Considerations

Section 8.2.1 of A201 is designed to preclude any claim from the Contractor that the time limits established in the Contract Documents are unreasonable from the outset. Then, Section 3.2 of A101-2017 makes it clear that Contract Time begins to run from the date of commencement of the Work. If a prospective contractor feels that any of the specifics related to Contract Time are unreasonable, then the appropriate time to negotiate a change is before the Agreement is executed, not afterward. When selecting the commencement date in the Agreement, parties should consider the following:

Option 1 – the date of the Agreement. Selecting the Agreement date as the commencement date can provide the parties a few benefits. First, it can provide a faster start. By beginning the schedule on the Agreement date, the Contractor can initiate Project activities without waiting for formal confirmation or administrative processes associated with a notice to proceed. Additionally, selecting the Agreement date can provide contractual clarity and avoid potential confusion or disputes over when the Project officially begins. There are a couple of drawbacks that parties may encounter when using the Agreement date. For example, initiating the Contract Time on the Agreement date may result in a delayed start to the Project if there are administrative or procedural delays in finalizing the Agreement or obtaining necessary approvals. Additionally, commencing the Work on the Agreement date may also provide limited time for Project preparation, including mobilization, procurement, and resource allocation.

Option 2 – the date set forth in a notice to proceed. Selecting the notice to proceed date in Section 3.1 of A101-2017 as the commencement date can be beneficial, because it provides formal authorization to begin Work on the Project after any necessary approvals, contracts, and conditions have been met. Using the notice to proceed date can also come with risks if the issuance is dependent on factors outside the parties’ control, such as obtaining regulatory approvals. Parties may want to consider limiting the period which the Owner may issue the notice to proceed and allow for an adjustment to the Contract Sum if the limit is exceeded.

Option 3 – Established by another specific date or means to determine the date of the commencement. Based on the special conditions of the job, the parties may feel that a different date other than the first two options is appropriate. If so, the parties should negotiate what makes sense to them and use that date. The parties may, alternatively, elect to refrain from specifying a date and to describe the means in which the date of commencement will be determined.

In any event, the parties should clearly communicate their expectations regarding the commencement date. Discrepancies or misunderstandings regarding the commencement date can hinder effective project management and result in project delays or project disputes. Good communication and understanding regarding the commencement date is an immediate way the parties can begin to align schedule expectations across the board.

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AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.