In the economic climate of increasing inflation, letters of intent remain widely used. They serve a meaningful purpose to start works earlier than would otherwise be advisable. Letters of intent issued at the appropriate time, and well drafted, allow the contractor to mobilise before the parties enter into the main contract. With high inflation and costs spiralling, the parties can take advantage of securing goods and materials at potentially lower costs than would be possible later in the programme. With more programmes being dictated by lead-in times and availability of goods and materials, the parties should carefully monitor the contractor’s deadlines for placing supply chain orders to realistically deliver the overall project programme.

Letters of intent should always be approached as interim measures only, while the parties finalise the subsequent main contract as soon as all the commercial and technical details are agreed. Letters of intent are not a panacea for engaging a contractor on a whole project, however, and they should never be viewed as a replacement for the main contract.

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