Letters of Intent

Cash flow is the lifeblood of any organisation. Companies in the private sector generally focus on increasing profits, but it is inadequate cashflows that can cause serious financial difficulties.

Information about Letters of Intent

CIPS is expressing beliefs on Letters of Intent (LOI) as unfortunately these are commonly used, especially in high value and high risk procurement projects, when in fact CIPS holds that their use should be avoided where possible. CIPS believes that P&SM professionals should be proactive in their procurement projects and should therefore be able to foresee the potential problem of having to start a project before the main contract can be let. They should therefore ask the main contractor, (or, as appropriate the sub-contractor), for a written offer covering the limited work required to get the project under way. This offer can then be accepted by the Client, rather than the Client issuing a LOI which is in fact an offer to the contractor. CIPS believes this approach represents better practice in such circumstances.

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