Commencement date

Commencement date is a date shown in contract when the described activities should begin (start time of completion). The contractor has to be prepared to begin the contract realization (e.g. start a project) on the commencement date. Usually commencement date is fixed by engineer . Not beginning at that date can be related to penalty.

Scheduling work after commencement date

The commencement date doesn't have to be stated in the contract. Sometimes end date is enough and contractor is able to create project schedule or calendar date of completion based on it. However, in more complex projects it is good to state commencement date.

Penalties

The commencement date is also an obligation for another part of the contract. It is the case if the place of construction or place of service has to be prepared before commencement date by the purchaser. If the place is not ready, purchaser cannot ask for penalty from contractor .

Guides for contractors

In guides for contractors, there are mentioned several subjects connected to commencement date :

• The commencement date should be established after 42 days from receiving letter of acceptance by the constructor,
• Within these 42 days employer should accomplish his arrangements about commandment to work,
• The commencement date does not have to be established after 42 days from receiving letter of acceptance by the constructor, if different agreement is stated in particular conditions,
• If there is no letter of acceptance, the contract agreement is equal to letter of acceptance,
• If there is no letter of acceptance, the signing contract agreement date is equal to signing letter of acceptance date,
• The commencement date should be communicated to the contractor by an engineer not later that in 7 days notice,
• Commencement date does not mean that work will actually commence that day, but it is start date of term of the contract,
• Start of work might be set in work order document and is happening after work commencement date.

Examples of Commencement date

• The commencement date of a project may be the date of signing the contract, or the date of receiving the required permits, or the date of mobilization of the contractor on site.
• For example, if a contractor is hired to build a new office building, the commencement date may be the date on which the contractor is mobilized and begins the first phase of construction.
• The commencement date for a service contract may be the date of signing the contract or the date on which the service is to be performed.
• For example, if a company hires an IT consultant, the commencement date may be the date on which the consultant begins providing their services.

Advantages of Commencement date

Commencement date in a contract serves to clearly define the timeline of a certain project or activity. It is beneficial for both parties involved in the contract as it provides clarity and helps to avoid any misunderstandings. The advantages of commencement date are:

• It sets a clear timeline for the completion of the contract, thus helping both parties to plan ahead and manage their resources effectively.
• It helps to ensure that the contractor has enough time to prepare for the project and make any necessary arrangements.
• It also helps to reduce the risk of delays and provides a structure to manage the project efficiently.
• It also helps to avoid any disputes between the parties as the commencement date is agreed upon in advance.
• It provides a clear indication of the expected completion date and helps to ensure that the project is completed on time.

Limitations of Commencement date

Commencement dates have certain limitations that need to be taken into consideration when signing a contract. These limitations include:

• The contractor must be ready to begin work on the specified commencement date. If the contractor is unable to begin work on the specified date, it can lead to financial and legal repercussions.
• The commencement date is usually determined by the engineer, meaning that the contractor must be prepared to work within the engineer's timeline and requirements.
• The date should be specific - if the date is too vague or open-ended, it can lead to confusion and delay.
• If the commencement date is changed, the contract needs to be amended accordingly.
• The commencement date should take into account any external factors that may affect the project, such as holidays or other events.

Other approaches related to Commencement date

In addition to the Commencement Date, there are other approaches that can be used when entering into a contract:

• Dependency on another event: This approach is used when the start of the contract is dependent on the completion of another event, such as the completion of a previous project or the signing of a separate agreement.
• Commencement date with a grace period: In this approach, a commencement date is set but with a grace period, which provides the contractor with additional time to be able to complete the required tasks.
• Phased commencement: This approach is used when the contract is divided into phases, with each phase having its own commencement date.
• No fixed Commencement Date: In this approach, no specific Commencement Date is set and the contractor is given the flexibility to determine when the contract will begin.

In conclusion, there are several approaches that can be used when entering into a contract. Depending on the needs of the parties involved, the most appropriate approach can be chosen.

Footnotes

Commencement date — recommended articles

Provisional sum — Contract for project — Construction management contract — Firm fixed price contract — Evergreen clause — Supplemental agreement — Task order — Forms of contract — Delivery Notice

References

• Applying IFRS. A closer look at IFRS 16 Leases. A closer look at the new leases standard (2018), EY Building a better working world
• Department for Business and Innovations & Skills (2010), Common commencement dates. Guidance for policy makers, Department for Business and Innovations & Skills, United Kingdom
• Griffith, R. L., Lee, L. M., Peterson, M. H., & Zickar, M. J. (2011). First dates and little white lies: A trait contract classification theory of applicant faking behaviour. Human Performance, 24(4), 338-357
• Institution of Civil Engineers (2002), Ice Conditions of Contract Term Version: Guidance Notes, Association of Consulting Engineers and Civil Engineering Contractors Association, Great Britain
• Pangalangan R. C., Kesia-Mbe Mindua A., Schmitt B. (2016), Situation in the republic of Mali in case of prosecutor, International Criminal Court, Mali
• Robinson M. D. (2011), A Contractor's Guide to the FIDIC Conditions of Contract, John Wiley & Sons
• Totterdill B. W. (2001), FIDIC User's Guide: A Practical Guide to the 1999 Red Book, Thomas Telford

Author: Weronika Burzawa