What is a request for proposal?
A request for proposal or RFP is a business document that organizations use to advertise and describe a project with a view to generating responses from potential vendors.
The purpose of an RFP is to tell other companies that a task requires completion and invites service providers to apply solutions.
They are particularly common in certain areas, like the public sector (healthcare, government, education, etc.) and defense.
Generally speaking, when an RFP is issued, several potential suppliers produce bids for the contract (based on the details of the RFP) and enter into competition with each other.
This makes it very important for the initial RFP to be accurate and sufficiently detailed. Otherwise, the bids will not properly reflect what is required and vendor proposals will be poor.
This article will discuss the basics of RFPs and give some useful tips on how to write them in a way that will provide you with the results you’re looking for.
Overview of key points
- RFPs are important tools used in bid procurement and solicitation.
- After sending an RFP, the issuing organization typically makes a shortlist of respondents and picks the best vendor (the “best and final offer”).
- RFPs are common in the public sector but also leveraged by private companies.
- RFPs tend to follow a standard structure that project managers should be aware of.
When might you need to send a request for proposal?
Any business that needs to outsource work in some way will probably have a use for an RFP.
All types of organizations from small businesses to government agencies and multinationals will feasibly need to write one at some point as it’s very rare for an organization to be equipped to deal with every challenge they encounter completely alone.
An example of a situation where an RFP could be used would be for the design of a new company website.
If a business is not large enough to have its own in-house design team, or they want to outsource for whatever reason, then the marketing team may produce an RFP describing the type of site and features that they want.
They would then send this to various agencies and web development companies to solicit as many good vendor proposals as possible.
The team could then go through the proposals, see which fits their vision and budget the best, and attempt to negotiate and hire.
RFPs are very useful in that they save time and put the hiring company in a position where they can simply review incoming proposals without individually negotiating with a large number of potential contractors.
What’s the difference between an RFP, RFI, RFQ, RFB, and RFx?
The term RFP is often confused with other similar document types. Here’s an overview of the main acronyms and what they stand for:
- RFI (Request for information): An RFI is a request for specific information from suppliers. RFIs are usually sent directly to individual companies in order to gain a better understanding of the market and potential solutions and functionality on offer.
- RFQ (Request for quote): An RFQ is a request for a specific quote for a clearly defined list of goods and services, often with a timeframe attached.
- RFB (Request for the bid): An RFB is essentially the same as an RFP. It may be used interchangeably to refer to an RFP or RFQ.
- RFx (Request for “everything”): An RFx is a request for all of the documents most typically used in the procurement process – supporting information (RFI), a quote (RFQ), and a proposal (RFP).
How to structure a request for proposal
While RFPs can be a powerful tool for a business, it’s vital that they’re written properly and contain sufficient detail if you want to get some good quality proposals back.
If an RFP is lacking in specifics, then the companies that are bidding are unlikely to grasp the project well enough to formulate a particularly useful plan.
On the other hand, an RFP that contains too much information and is not properly structured is probably also going to be ineffective.
Companies either won’t take the time to or just won’t be able to understand the real thrust of the RFP.
Every RFP is different, but in general, addressing the following points will ensure that yours contains the information it needs.
1. Introduction and summary
Give a little background information about your company, contact information like phone number and address, what you do, and why you’re good to work with.
It’s also advisable to give a quick summary of the entire project right here at the beginning of the RFP before you start the next steps, even if it’s only a few lines.
This allows companies to see whether they are interested in or even able to take on a specific project and prevents anybody’s time from being wasted.
2. Scope of the project (statement of work)
Here, you should include all the necessary details about the project and your business goals.
For example, if it’s for website design, you should explain what the website needs to do, the amount of traffic you expect, and so on.
Give estimated time frames for delivery of the different elements of the project.
This helps bidding companies to see whether they are realistically able to meet your schedule and allows them to plan ahead.
4. Structure of proposals
Give a brief explanation of how you’d like any submitted proposals to be structured.
Having a set structure really helps to simplify your review during the proposal procurement process, will save you a lot of time, and helps the bidders understand what’s needed.
5. How to submit proposals
The bidding companies obviously need to be able to submit their proposals, so here you should provide details of how they should do this, along with deadlines.
6. Outline selection criteria
You can include some points here about the evaluation criteria during the selection process i.e. what main features you’ll look for in the winning proposal.
This helps to prevent anyone from getting the wrong idea and focusing too much on irrelevant things.
7. Potential issues
Try to think of the possible issues that could be encountered with the project.
For example, any laws and regulations that may need to be accounted for.
8. Your budget
Bidders need to know your price range for the project to tailor their approach accordingly.
Try to make it realistic, as under-budgeting is likely to result in poor-quality proposals.
Tips for writing RFPs
Below are some universal tips that can help improve the effectiveness of any RFP:
- Structure the RFP in a clear, logical way.
- Target your approach by looking at the market to find companies that you need.
- Include enough detail for bidders to produce a good proposal.
- Use RFP templates to help you design the structure.
Also, be realistic with your timeframes.
Be organized and send your RFP well in advance of the project deadline to give sufficient time for the bidding process and for a good-quality project to be delivered.
Understand your RFPs before sending
For big projects, there can be a lot of money riding on getting good proposals, but without a thorough understanding of the RFP process, it can be hard to write one effectively.
Use insights above to write RFPs in a way that will get you the results you’re looking for.
You might also wish to consider using software to streamline the process of sending RFPs and managing RFP responses and vendor proposals.
Modern apps offer a range of automation, editing, and tracking tools.