Workshops covering all the important construction contract topics specifically for subcontractors. From understanding critical terms, to negotiations and getting paid.

In the fast-paced and complex world of construction, projects often need to move forward before all the terms of a formal contract are finalized. To bridge this gap, stakeholders commonly use Letters of Intent (LOIs)  and Memorandums of Understanding (MOUs) . While these documents are not full contracts, they play a critical role in laying the groundwork for formal agreements. However, their use comes with risks if not carefully drafted and understood. LOI vs. MOU: What’s the Difference ? While the terms "Letter of Intent" and "Memorandum of Understanding" are often used interchangeably, they have distinct common uses: Letter of Intent (LOI): A Letter of Intent is a preliminary agreement that records the parties’ intention to enter into a formal contract while setting out the essential commercial terms to guide the parties during an interim period. In the construction industry, an LOI commonly authorizes a contractor or subcontractor to proceed with limited or preparatory work before a formal contract is signed, such as authorizing some limited work that needs to be performed early in the project or ordering long-lead time materials and equipment. Memorandum of Understanding (MOU): By contrast, an MOU is usually broader in scope and generally used to record mutual intentions or cooperative frameworks. While LOIs are most often used between an owner and a contractor or a contractor and a subcontractor, MOUs frequently appear in joint venture arrangements, development partnerships, or collaborations involving public authorities and private developers. An LOI therefore carries greater potential to create enforceable rights and obligations, while an MOU generally serves as a statement of good faith. When and Why Are LOIs and MOUs Used ? Construction projects often require early commitments to meet timelines and full construction contracts are lengthy and require negotiation. LOIs/MOUs allow limited progress while those negotiations continue, saving time and keeping projects on schedule. LOIs are especially helpful in situations such as: Fast-tracked projects where delays are costly Securing pricing, availability, or commitment from subcontractors Allowing site preparation or procurement to begin before contract finalization Clarifying intent during preconstruction or negotiation phases Are LOIs or MOUs Legally Binding ? It depends.  The enforceability of an LOI or MOU depends on the parties’ intent and the language used. To make such documents binding: Express Intention:  State clearly whether the document is legally binding. For example, “This Letter of Intent is intended to create legally binding obligations regarding terms and payment for work performed prior to execution of the formal contract. Essential Terms: The more complete the terms (e.g., price, payment timing, scope, schedule), the more likely a court will enforce it. Authorizing Limited Work: If a party is expected to begin work or incur costs, the document should clearly state that and define the parameters. Reference the Formal Contract:  State that all subsequent work will be governed by the final contract once executed. Essential Terms to Include (While Keeping It Short) These provisions help ensure both parties understand their obligations during the interim period. Even a brief LOI or MOU should include: Parties Involved  – Full legal names and roles (e.g., general contractor, subcontractor). Project Description  – Name, location, and Owner information. Scope of Work  – Description of the limited work authorized, such as a limited scope of work and placing orders for long-lead time materials and equipment. Payment Terms  – The pricing or payment structure during the LOI/MOU time frame and in the event a formal contract is not executed. This should address payment for the materials and equipment ordered under the LOI/MOU if no formal contract is ever executed. Schedule/Timeframe  – Related to the limited scope of work, if applicable. Insurance Requirements – This allows both parties to understand the insurance requirements for the project to ensure they can be complied with prior to work commencing. Binding Clauses  – Make it binding pending finalizing the formal contract. Intent to Contract  – State that the parties intend to enter a formal agreement with mutually agreeable terms, but that the LOI/MOU is biding until that happens or until it is terminated. Timeframe of LOI/MOU and Termination Rights and Process  – Provides a deadline for the formal contract to be finalized and the ability to withdraw from the LOI/MOU if no formal agreement is reached. Dispute Resolution – This should include a short process for resolving disputes during time period of the LOU/MOU and whether attorney’s fees will be available to the prevailing party. Signatures and Authority – Used to ensure the document is executed by parties with appropriate authority to bind their organizations. Common Pitfalls to Avoid Unclear Binding Intent:  Failure to specify whether the document is binding often leads to litigation. Scope Creep:  Allowing work to proceed beyond the stated scope can result in significant disputes and claims. Missing Key Terms:  Neglecting to define payment or termination rights can expose both sides to financial risk and inequitable outcome. Overreliance on LOIs:  Prolonged use without finalizing the main contract undermines commercial certainty. Misuse as a Substitute for a Contract: These documents are not meant to replace formal contracts. Relying on them long-term is risky. Conclusion LOIs and MOUs are useful tools in the construction industry when used appropriately and with clear understanding. They help initiate work, secure commitments, and clarify intent before a formal agreement is signed. However, their legal effect depends heavily on their language and structure. To reduce risk, parties should always: Use precise, unambiguous language Limit the scope and duration of the document Ensure all parties understand their obligations To keep out of trouble and ensure that the LOI/MOU covers your risks, it’s always a good idea to seek legal advice before relying on these documents to begin work.

Adopting a work ethic of “excellence” is a powerful and lasting tool.  Don’t confuse this with perfectionism. It is far different. Ironically, the “perfection” mindset can be “demoralizing and lead to burnout” according to Psychology Today. Since being “perfect” is not generally achievable, the “perfection” mindset actually leads to procrastination primarily due to the fear of failing. It also increases feelings of self-disappointment and saps us of drive and motivation. As a stark contrast, approaching work with a mind toward excellence energizes your determination and significantly increases job enjoyment. No matter how mundane the task is or how much you may dislike your current job, knowing you did an excellent job has a lasting, positive effect. Plus, always embracing the “excellence” approach puts you on a lifelong trajectory of constant improvement and pride in your work product. Comedian, Kevin Hart, in his New York Times bestseller, “I Can’t Make This Up”, gives a perfect example of the powerful impact an excellence mindset can have on your life. During his high school swim team graduation ceremony, Hart watched his teammates who had worked harder than him receive many awards. They all had plans for their next step in life. Hart did not. That night, he was pretty down on himself. After attending a community college for a few weeks, he was failing miserably and knew it was not for him. His mom required him to do something , so he walked into a sporting goods store and, drawing on his great personality, landed a job selling shoes. He liked the people he worked with and found he was a natural at talking to customers. It eventually clicked in his brain that if he actually learned something about the shoes he was selling, he could “really shine in this space.” At that point, he decided to be excellent at what he did, even if it was just selling shoes. Soon he was hooked on the challenge of seeing how many sales he could do – plus he was enjoying the extra income for the commissions he received from being excellent at shoe sales.  Per Hart: “As the weeks continued to pass, the enjoyment I experienced from letting my personality shine and convincing people to buy sneakers intensified .” Hart often had his workmates in stitches with the funny stories he told. That experience convinced him that he wanted to be a stand-up comic. So, while keeping his day job, he also worked tirelessly on his craft with the same commitment to excellence that he had developed while selling shoes. And we all know how that commitment turned out for him! So, stop dreading your to-do list. Stop dreading the workday. Stop dreading your job. Just stop dreading.  Instead, light yourself on fire and experience the “high” you feel at the end of the day when you know that you applied excellence to everything thing you did!

According to the 15 th  Annual Construction Disputes Report (the “Report”) published by Arcadis , “speed, agility, and adapting to change” are the secrets to managing the reality that disputes are constant in this industry. But what does that mean? “Speed” can be achieved by using a proactive approach to “to identify potential issues early and address them before they escalate into full-blown conflicts.” The first step here is to thoroughly study the plans, specifications, preliminary project schedule, and site conditions to increase your awareness of where potential problems may arise. This should be done pre-bid to the extent possible, and addressed in pre-bid RFIs. “Agility” is conduct designed to “prevent disputes from arising in the first place”, such as using “open communication and a willingness to quickly resolve unforeseen circumstances.”  Being a good team player means you don’t throw your hand up when there’s a problem, you offer solutions. “Adapting” is a skill that involves embracing “innovation to mitigate risks and address disputes effectively”, which can include the use of AI to “forecast potential project disruptions, enabling stakeholders to take preemptive actions.”   So, what types of disputes are most common so that you can be on the lookout for them? The Report shows that tied for first place are “errors and/or omissions in the contract documents” and “Owner/Contractor/Subcontractor failing to understand and/or comply with its contractual obligations.” While contractors and subcontractors cannot generally ensure that the plans and specs are accurate for the intended results of the project, nor should they be expected to (except for design-build project deliveries), a lot can be done to avoid misunderstanding contractual obligations. Specifically, the Report points to “misaligned expectations, unclear scope requirements, and lapses in adherence to agreed-upon timelines and standards are frequent triggers for conflict.” This is caused by “a lack of contract knowledge among both owners and contractors” which “often amplifies these issues, creating a cycle of misinterpretation and dispute.” What’s the best line of defense to avoid this #1 cause of expensive construction disputes? 1.      Make Sure Your Scope of Work is Clear.  This starts at the time of bid. If you’re a prime contractor on a public or federal project, leave yourself ample time to review the plans and specs carefully and use the pre-bid RFI process to get clarification when needed. A subcontractor’s proposal should clearly state the plan sheets and spec sections they are bidding. A sub’s proposal should also include clarifications and exclusions so that the prime contractor is on notice of exactly what scope you are offering for the price you are offering. Then make absolutely sure that your subcontract includes the scope you presented in your proposal, including the references to the plans and specs for your work and your clarifications and exclusions.   2.      Review the Project Start and End Dates . This is critical in today’s market. Before you submit your proposal, get confirmation that long lead time items can be acquired in time to meet that schedule. Sub’s should clearly state the lead times of materials and equipment that will be needed for their scope.   3.      Learn the Changes and Dispute Resolution Process . You can never study these procedures too much! This is the absolute key to resolving questions and disputes quickly: from the RFI process, to the notice requirements, to the claims procedure. Exercising your rights ensures that the change order or other dispute moves forward efficiently without having to wait until the end of the project!   If you or your team struggle with any of these must-do’s for managing disputes, or maybe you need to brush-up on these skills, OnSite Pro Development can help! We offer targeted and exciting workshops to give you and your team the confidence needed to boldly navigate the more challenging aspects of contracting and slay that DISPUTE DRAGON! Check out our most popular workshop at: https://www.onsite-pro-development.com/popular-workshops .

How We Train Our time-tested, dynamic workshop environment keeps your team more engaged, which provides an enjoyable experience. Our minds are way more open to learning when we are enjoying the process! Current industry topics are integrated with established law to provide a deeper understanding of contract terms and pro-active contract management. We provide training three ways: (1) Workshops Online - These are periodic live webinars designed to tackle the unique issues subcontractors face. (2) Workshops On Site - These provide convenience and privacy to your team in a venue that allows optimal understanding for all participants. This also encourages open dialog to target the specific information your team needs most. Select from a wide variety of topics so that your workshop can be tailored to meet your team's specific needs. (3) Subcontractor Summits - These are full-day workshops open to any attendees who register. Workshops Online WORKSHOPS online are designed to resolve the unique issues faced by contractors and focus on topics such as understanding and editing subcontracts, tackling claims procedures, and performing work. Unique to our Workshops, we also provide actionable strategies for you to implement what you've learned, including how to become an effective communicator and negotiator. Each Workshop begins with an energetic classroom session with live Q and A, and many include specific hands-on challenges such as redlining subcontract terms or our entertaining “project gone wrong” hypothetical case studies where you put your newfound skills to the test. Who Should Attend? Company Owners and Management Project Managers and Project Engineers Risk Managers Contract Administrators Superintendents Why Train? Increase Profits: Projects are bid with tight margins to ensure success of an award. But, those thin margins are soon eaten up by avoidable mistakes that often result from simply being ignorant as to your contractual obligations and how to work the system to your advantage. Focused training by a professional increases your team's ability to properly and confidently manage the contract and assert your rights! Talent Retention and Productivity: According to Indeed.com: "Implementing training programs in the workplace will help employees feel like the company is invested in them. By continuing to teach your employees new skills and abilities, they will not just become better workers, they will feel like more productive members of the organization. This will improve their morale as well as their workplace capabilities." Our Most Popular On Site Workshops Understanding and Negotiating Contract Terms Learn More The Devil is in the Details - Managing Project Documentation Learn More Changes and Claims - Do it Right or Lose Your Rights Learn More Articles Start Now, Contract Later: Using LOIs and MOUs Without Getting Burned Pam Scholefield a few seconds ago 4 min read Will Your Work Ethic Help You or Haunt You? Pam Scholefield Sep 19 2 min read Secrets to Slaying the Dispute Dragon Pam Scholefield Aug 19 3 min read Playing the Game on Two Fields – Bond Claims for State vs. Federal Projects Pam Scholefield Jul 29 3 min read Is the GC Hiding the Ball on Owner Payments? Pam Scholefield Jul 8 4 min read Why Wait? Resolve Extra Work Payments Now! Pam Scholefield Jun 23 4 min read

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The 2024 San Diego Subcontractor Summit was a rousing success! Pam Scholefield - "Negotiation Workshop" Brittany Russell -"Mindful Negotiation" Oliver Craig -"Evaluating Bonded Work" Pam Scholefield’s high energy style kept everyone engaged and focused on the important stuff for negotiating subcontract terms, contract management, and claims drafting. Brittany Russell with Mindful Synergy Solutions provided an insightful session on mindfulness during negotiations, which was very well received. Oliver Craig with Cavignac offered useful information on bonds and fielded questions as they relate to subcontractors. We are excited that the Subcontractor Summit was met with such positive feedback. Please Send Me More Information on upcoming Summits First Name Last Name Email Message Send Now Thanks for submitting!