Commencement Date

The Commencement Date is the official start date of a government contract. It is typically defined in the contract agreement as either the date of the Notice to Proceed (NTP), the date of site handover, or a fixed calendar date specified in the tender. All timelines, milestone dates, Completion Date, and Liquidated Damages (LD) periods, are calculated from the Commencement Date.

What is the Commencement Date?

In Indian government procurement, the Commencement Date (also referred to as the "date of commencement" or "start date" in contract documents) is the anchor point for the entire contract schedule. The General Conditions of Contract (GCC) used by central government departments typically define the Commencement Date as the date stated in the NTP or, in the absence of an NTP, the date on which the contractor acknowledges receipt of the Work Order.

It is important to distinguish the Commencement Date from the date of the Letter of Award (LOA). The LOA can be issued weeks before the Commencement Date if site handover, pre-conditions, or formalities take time. The contract clock starts on the Commencement Date, not the LOA date.

For works contracts, the Commencement Date is often linked to physical site possession. The procuring entity must hand over the encumbrance-free site to the contractor on or before the Commencement Date. If site handover is delayed, the Commencement Date is effectively pushed forward, and the contractor is entitled to a corresponding EOT.

For goods supply contracts, the equivalent concept is the "delivery period start date," which is typically the date of the Supply Order or Work Order.

Why the Commencement Date matters for Indian government suppliers

Getting the Commencement Date correctly documented is fundamental to protecting against LD claims. If a procuring entity issues the NTP but hands over the site 30 days later, the contractor should formally record the actual site handover date and seek an EOT for those 30 days. An undocumented discrepancy between the NTP date and the actual site handover can create LD liability for delays that were not the contractor's fault.

Example

A road contractor receives a Work Order for a district highway project in UP. The NTP is dated 15 June, making the Commencement Date 15 June. However, land acquisition for one stretch is still pending, and the actual site (excluding the disputed stretch) is handed over on 15 July. The contractor records this in the Hindrance Register and applies for a 30-day EOT from the state PWD, which is granted, pushing the revised completion date by 30 days.

Frequently Asked Questions

Can the Commencement Date be changed after it is set?

The Commencement Date itself is typically fixed as per the contract. What changes is the Completion Date, through an EOT. However, if the procuring entity cannot hand over the site on the NTP date, the effective Commencement Date is pushed to the actual site handover date, and the Completion Date adjusts accordingly with a formal EOT.

What if a contractor starts work before the official Commencement Date?

Work done before the Commencement Date is done at the contractor's own risk. If the contract is not subsequently executed or is cancelled, the contractor has no legal claim for costs incurred during that period. Contractors should never mobilize before a valid NTP or Work Order has been issued.

How is the Commencement Date recorded?

In works contracts, a site possession report or handing over note is signed by both the contractor and the department's engineer on the date of site handover. This document establishes the official Commencement Date if there is any dispute about when the contractor was actually able to start work.

What is the significance of the Commencement Date for bank guarantees?

The Performance Bank Guarantee (PBG) validity is typically calculated from the Commencement Date, it must remain valid through the Contract Period plus the Defect Liability Period (DLP). If the Commencement Date shifts, the contractor must ensure the PBG validity is also adjusted to cover the full revised period.