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A subcontractor letter of intent is a document a contractor sends a subcontractor confirming that it intends to award them a package of work, ahead of a signed subcontract. It names the scope, the price, and the schedule.
Construction runs on long lead times, and that is why the document exists. Materials need ordering, crews need booking, and shop drawings need starting well before the paperwork catches up.
It also gives the subcontractor something to work with. A sub can approach suppliers, arrange bonding, and hold capacity on the strength of a written intention in a way a phone call does not support.
The document sits in an awkward place, though. It is written to fall short of a contract while being relied on like one, and that tension is where most of the trouble comes from.
Send a subcontractor letter of intent when the award decision is made but the subcontract is not ready. Typical situations include:
Do not send one to hold a subcontractor while you keep shopping the package. Issuing an intention you may not honour damages a relationship you will need on the next job.
A subcontractor letter of intent should run one to two pages and be specific enough that nobody can misread the scope.
Name the contractor, the subcontractor, the project, and the site address.
Describe the package precisely, and reference the drawings, specifications, and revision numbers it is based on.
State the price, whether it is lump sum or measured, and what is included and excluded.
Give the expected start, the duration, and any milestones the package must hit.
Say exactly what the subcontractor may do at this stage and up to what value.
List what the sub must provide before work begins.
Set out what must happen before the subcontract is executed.
State what the letter is and is not, add an expiry date, and provide signature lines.
This is where subcontractor letters go wrong, and the consequences are expensive on both sides.
State the authorised value in figures. Writing that the subcontractor may proceed with design and procurement up to a stated amount gives both parties a hard limit, and it is the single most useful sentence in the document.
Name the specific activities. Ordering materials, preparing shop drawings, mobilising to site, and commencing installation are very different commitments, and a general instruction to proceed covers all of them by implication.
Say what happens if the subcontract is never signed. How the sub is paid for work already done, and who owns materials already ordered, should be written down rather than left to goodwill.
Tip: Subcontractors should not commit resources beyond what the letter authorises in writing. A verbal assurance from a project manager is not something you can invoice against if the job is later cancelled.
A subcontractor letter of intent takes about half an hour once the package is settled. Document Genius walks you through each section with simple questions.
Only issue one where the package is genuinely being awarded.
Reference drawings and specifications by number and revision.
Value, inclusions, exclusions, and how it was arrived at.
Name the activities and cap the value.
Insurance, bonding, prequalification, and any approvals.
Date it, sign it, and keep it with the project records. Start yours now and have it ready today.
Whether a letter of intent creates enforceable obligations is a genuinely contested area, and construction disputes turn on it regularly.
Say clearly which parts are intended to bind. Confidentiality, the authorised-work provision, and how that work is paid for are usually meant to be enforceable even where the wider award is not.
Include a line confirming that a signed subcontract will govern the relationship and will supersede the letter entirely.
Watch what actually happens on site. Conduct can matter as much as wording, and a subcontractor who has been working for weeks under a letter of intent is in a different position from one who has ordered nothing.
Set a real expiry and act on it. Letters that roll on for months, with work proceeding and no subcontract signed, are the classic route into a dispute.
None of this is legal advice, and the position varies considerably by jurisdiction and by the wording used. Have a construction lawyer review your standard form before you issue one, and again before you rely on one.
If a letter of intent arrives from a contractor, read it for exposure rather than for the award.
Find the authorised value and the authorised activities. Anything you do beyond what is written down is at your own risk, however confident the site team sounds about the subcontract landing.
Check what happens if it goes no further. If the letter is silent on payment for work already done, ask for that in writing before you order anything or book a crew.
Look at the scope references. A package defined against drawings by number and revision is one you can price and defend; a package described in a sentence is one you will argue about later.
Watch the expiry. If the date passes and no subcontract has appeared, stop and ask rather than continuing on momentum, because continuing to work quietly weakens your position rather than strengthening it.
Tip: Keep your own dated record of what you were authorised to do and when. If the job is cancelled, that record is what your claim rests on.
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