The RFP process came about as a way by which organizations can solicit bids from qualified vendors. An RFP outlines your project’s criteria, and demands, and helps you find the vendor best suited for your needs.
RFP’s also help prospective contractors understand exactly what you require and what you expect from them. And a public RFP helps government agencies find the right vendor and avoid favoritism and sweetheart deals.
Whether you are an organization that needs a contractor, or a contractor who hopes to woo larger clients, you need to understand RFPs and how they work. Read on to find out more!
What Is a Request for Proposal?
RFP stands for “Request For Proposal,” and is a business document that announces a project, describes it, and solicits bids from qualified contractors to complete it.
Open business RFPs appear on issuer websites under “procurement” and/or “publishing.”Open RFPs may also be published in newspapers or other local publications.
Closed RFPs (also called “invitation-only RFPs”) are issued only to selected and prequalified vendors.
Comparing RFP and RFQ
While both RFPs and RFQs can be equally important to your business, there are some important differences to keep in mind.
RFQs (Requests for Quotes) are concerned only with pricing information. The sender of an RFQ knows exactly what the organization needs, and simply needs to find the best supplier(s), usually the one with the best price.
RFPs include price requests but are generally used in situations where the sender needs capable contractors for a more complex project. An RFP provides the sender’s needs and lets the contractor explain how they will meet those needs.
The Purpose of an RFP
The RFP process is the means by which an organization gathers bids for a project or service. The RFP issuer must evaluate the feasibility of the submitted bids, consider the financial health of the bidding companies, and weigh each bidder’s ability to undertake the project.
For example, an RFP to update your organization’s aging network infrastructure could allow prospective clients to suggest the hardware and software setups that best meet your requirements.
It could make clear your budget constraints and call out legacy software that must be usable on your new network.
Involving Parties in The RFP Process
There are several different stakeholders involved in any RFP process, meaning that you will have to engage and work with a number of different professionals.
- Consultant: RFP consultants work with the client and procurement team to determine client needs and properly explain those needs within the RFP.
- Procurement Professionals: Coordinate the RFP’s creation and keep track of its progress.
- CFO or CPO: the Chief Financial Officer or Chief Procurement Officer evaluates costs and ROI to determine whether a proposed solution is financially viable.
- Vendors: businesses that respond to the RFP.
What Should Be Included in an RFP
The better your RFP, the more likely you are to find a vendor who is able to fill your requirements at an acceptable price. Here’s a quick walkthrough of what your RFP documents should include to ensure they are clear, well-planned, and well-written.
Organizational Background Information
Your RFP documents should share all necessary information about the organization in sufficient detail. Bidders should know the project’s location and the services or products that your organization offers.
Just as it is important for you to know your target audience, it is important for bidders to know their prospective clients so they can ascertain if this is a good mutual fit.
Detailed Project Description and Goals
One of the most important parts of the RFP process is putting together all the details of your proposal. Providing specific and exact requirements helps ensure higher-quality bids.
A detailed RFP lets vendors know exactly what your organization is looking for and allows them to determine if they can meet your needs before placing a faulty bid and wasting everyone’s time.
Requests for proposals should let prospective vendors know the audience that will benefit from their work and the solution that you hope to achieve.
You need a detailed list of the project’s required and preferred features as well as a clear description of the project’s boundaries and scope.
A vague RFP leaves everybody confused and can lead to headaches and cost overruns down the line.
Share your budget. Many requests for proposals include only vague figures and leave specific talk of budgets for later.
But when you provide a clear budget that lets vendors know what you actually have to spend, you will get more qualified responses to your RFP.
When you share your budget, vendors can break down the expenses and ensure that their bid is financially feasible.
Project Deadline and Milestones
A smooth RFP process flow can save you (and your contractors and subcontractors) a lot of headaches.
When you include detailed timeframes in your RFP, you can filter out vendors that can’t meet those deadlines.
Setting milestones lets you keep the project on track and deal beforehand with situations that could lead to delays or overruns.
Questions and Required Information
You need to create a list of information that you need from potential vendors, including things like:
- Proof of technical credentials required to complete your project
- Prior successful work on projects for similar companies
- Proposed cost of their services
- Any prior work samples
You want good mutual communication between your organization and your contractors.
Let them know ahead of time about any potential roadblocks that might lead to delays or prevent them from completing the project.
Getting this information early in the RFP procurement process lets you focus on vendors who have the necessary resources and expertise.
In your initial team meeting, you need to set out the criteria that are most important to your project.
Sharing this information with bidders lets them know exactly how your organization scores prospective contractors.
This gives them an opportunity to determine ahead of time whether this project is a good mutual fit. Some of the most common criteria found on an RFP process checklist include:
Contact Information and Guideline for Submission
All requests for proposals should include information like:
- Where the RFP can be accessed or downloaded.
- Where and to whom the final proposal is to be submitted
- How long a proposal should be
- How many copies of their proposal a candidate should include
- Any supporting documentation required
- Your organization’s final deadline for receiving proposals
Tips for Business: 5 Essential RFP Process Steps
RFP process best practices involve defining your challenge clearly and in detail, then finding the vendor who best meets your organization’s needs.
An RFP process flow chart that breaks the process down into easy steps will help you to more efficiently manage complex side-by-side comparisons of competing vendors and ensure that everybody involved is on the same page throughout the process.
1- Brainstorm Business Requirements
A successful RFP leads to a partnership, so it is important to make sure vendors have the background and context to understand your business needs.
Your RFP requirements should be carefully thought out and clear, with no ambiguity or room for misunderstanding.
The RFP should be clear about the problems the issuer hopes to address and any complications that might arise. Your team members are stakeholders in your project and its success.
Drafting requests for proposals should start with asking stakeholders questions like:
- What are you looking for?
- Are you interested in a long-term partner or a solution for a one-time project?
- What challenges are you solving?
Use that information to create evaluation criteria to use for the RFP process.
Ask stakeholders how they expect the chosen vendor to solve the challenge facing your organization.
The more clearly you state your problem and your proposed solution, the more successful your RFP and the subsequent project will be. Poorly-defined goals leave stakeholders and vendors rudderless and lead to costly confusion.
Consider Your Evaluation Criteria
An important part of the RFP process is determining what are the most important factors of the proposed solution, and what would be nice but not mandatory.
Stakeholders should determine goals that must be met and desired additional outcomes that would weigh favorably on a vendor proposal.
2- Draft Your RFP
Once you have gathered this information from your stakeholders, you can create questions for your prospective vendors like:
- What training programs do you offer?
- What is your implementation process?
- Who are your competitors?
- What experience do you have on similar projects?
- Can you provide references or reviews?
Asking vendors the right questions helps ensure you get the information you need to choose the right bidder.
3- RFP Evaluation
The most important part of the RFP process is deciding which vendor has offered the best bid. But how do you come to that decision?
When you are writing your RFP, you need to also create standards that guide your scoring of vendor proposals.
These scoring criteria will save you a great deal of time in the long run and help you hone in on vendors who best meet your needs.
The Importance of RFP Evaluation Criteria
Developing RFP evaluation criteria — a process for evaluating the RSP that guides the scoring of vendor proposals — is an important part of every request for proposal.
RFP evaluation criteria should be shared with both internal teams and bidders.
Giving bidders the RFP evaluation criteria sets expectations, ensures high-quality proposals, and helps vendors focus on the most important areas of the RFP.
Stakeholders who participate in the RFP scoring can use the evaluation criteria as a reference document, adding clarity and transparency to the RFP process.
Common RFP Evaluation Criteria
To start the RFP process, gather a list of requirements from stakeholders involved in the RFP management. Those who are new to RFPs may find a list of evaluation criteria found in a standard RFP contract to be useful. Some common RFP evaluation criteria include:
- Technical capabilities: What training, certifications, and academic credentials do contractors working on this project hold?
- Vendor experience: How long has the vendor been in business and how many similar projects have they completed successfully?
- Vendor reputation: How are their customer references?
- Data security: What steps does the vendor have in place to protect customer data from hackers?
- Customer communication: What steps does the vendor take to maintain lines of communication with stakeholders before, during, and after the project?
- Total price: What is the total price offered in their proposal?
4- Shortlist Your Vendors
Whenever you put out an RFP, you’re likely to get a good number of bids. Consider adding some factors that will let you shortlist qualified vendors and save everybody’s time.
Determine critical factors like minimum years of experience or expertise in a particular software package that allow you to quickly eliminate vendors who are not qualified or cannot compete and to identify bidders whose proposal deserves a closer look.
5- Write Your RFP Contract
Once you select a vendor, you need to document that decision and start the go-forward process. This involves providing the RFP results to the legal department so they can draft a contract with appropriate performance metrics and review processes.
You will also need to draft a statement of work (SOW) setting out the project’s goals, deliverables, performance criteria, and applicable timelines. Make sure your needs and expectations are stated clearly on all documents.
Benefits of Request For Proposal
An RFP in business is, in part, an advertisement announcing that a project is proceeding and seeking qualified candidates who can get the job done.
It’s a time-consuming process, but it is also an invaluable way to find qualified vendors.
And by using RFP automation and good RFP templates, you can streamline the process and make your processes for seeking vendors and developing projects more focused and transparent.
Help Define Your Needs Objectively
The Request for Proposal process is an internal writing exercise and discipline for your company.
Creating the RFP helps you to identify your information systems requirements and needs in detail.
And the RFP is also the best way to get different departments on the same page and get buy-in and feedback from different interest groups within your company.
Allow Comparison for Better Results
Through analyzing vendor responses, you can use the RFP in project management. Vendor responses help you get a clear snapshot of the market provided to purchasers.
And vendor responses to RFP questions can be the basis for detailed comparisons of functions, vendor implementation methodologies, investment summaries, and other important information that provides you with a clearer vision of what each vendor offers as well as areas where you may need to manage your expectations.
Guarantee Your ROI
RFP process management provides you with an opportunity to analyze functional differences and advantages of different systems against each other.
Armed with this information, you can begin thinking about how each proposed system will have a return on investment and account for possible complications that might occur.
When you know what you want and have measures in place to ensure you get it, your chances for a solid ROI improve dramatically.
Promote Transparency and Fairness
Most systems selection projects have to be scheduled over months rather than days because of team and vendor availability.
An organized methodology and automated RFP process helps you track and compare what your observations, questions and conclusions are and speeds up the RFP selection process.
And because everybody involved knows the selection criteria, there is greater transparency and fairness in the final decision.
Tips for Vendors: How to Improve Your RFP Response
When you’re responding to the RFP process, you want to know how to write an RFP that gets a positive response. Perfection may be unattainable, but there’s always room for improvement.
If you follow these pointers, you can find yourself winning more big contracts from companies seeking the skills that you can provide them.
Get Involved with RFPs that You Are More Likely to Win
The request for proposal process can be both difficult and disappointing. One of the best ways to improve your RFP response rate is to avoid RFPs you don’t qualify for.
RFP sourcing software can provide valuable insights from clients and competitors to help you steer clear of unqualified RFPs.
Before you responding to an RFP, ask:
- Is your solution a fit?
- Does your price match the prospect’s budget?
- Is it a strategic fit?
Focus on a Winning Template
Create a template you can use for different requests for proposals. Your response template needs the flexibility to be customized as required or used in its generic form.
Some areas to cover in your RFP response template include:
- Company overview, history, and locations
- Training & implementation support available to customers
- Security practices and certifications
- Software/Functional/Technical expertise
- Biographies and CVs of key personnel
- Case Studies of similar problems and solutions
Ask Critical Questions
One of the best ways to leave a good impression on a procurement manager is by showing that you have read through the RFP. Inquiries seeking a clearer understanding of what the organization wants can give you an edge over your competitors.
Provide As Much Details As Possible
The RFP evaluators are likely dealing with multiple proposals. You need to set yourself apart from your competitors and make sure you let the evaluators know who you are. Your proposal should include as much of the following information as is available:
- Experience Summary
- Samples of work
- Contacts for references
- Resumes of each member working on the project
Define Roles and Responsibilities Clearly
The RFP documents in your project plan should emphasize expectations and provide clear role definitions.
A project manager should be able to see at a glance each team member’s responsibilities on this project and the competitive advantages they bring to the table.
This kind of clarity adds credibility to your proposal and sets out information that will help a team in making a final decision.
Study the RFP Thoroughly
RFPs include a lot of important information you might miss on a casual reading, including things like delivery dates, deadline dates, mandatory walkthroughs, and rules and regulations of the bid process.
You should also make sure your response touches upon all subjects of concern listed within the RFP documents.
You should also study bidding prices on similar projects and clients, as that will help you to fine-tune your final bid.
The Bottom Line
The RFP process remains an important part of organizational procurement. The digital technologies that streamline today’s process of producing business RFPs continue to grow more powerful. But no matter how far technology advances, the techniques and tips we’ve provided above will still be vital to those looking to craft a successful RFP or proposal.
If you’re looking for other ways to grow your business, check out our other blogs: