People have lots of questions about Request for Proposals or RFP. It is the Supply Management marketing term for seeking respondents for sales opportunities. It can be understood in two ways:
- Generic: An RFP is a document or package that the issuer circulates to invite respondents to provide a sought product or service.
- Specific: An RFP is a document or package that the issuer circulates to ask how a respondent will provide a sought product or service following a specific set of requirements.
The generic usage is very common but the specific usage is more accurate since it allows a differentiation with other procurement concepts.
An RFP requires the respondent to be creative – its response should contain different techniques, processes, and technologies that it alleges gives the issuer what it is seeking. The RFP response allows the respondent to explain why they’re the ones who should be selected to execute the contract.
If the issuer wants to identify companies that can provide a specific product or service, then they need to issue a Request for Information (RFI) or if in the design, engineering, or construction industries, a Request for Qualification (RFQ).
RFI Vs. RFP
A Request for Information (RFI) is used to initiate a project when the issuer does not have a preferred vendor list or needs it to be updated. The RFI provides an outline of what is required, both for the opportunity as well as respondent qualifications.
After prospective respondents respond to the RFI, the issuer will select those who it believes demonstrate they can provide the wanted product or service following all the specifications and conditions of the opportunity.
Only those respondents who prequalify will be allowed to participate in the opportunity’s next round – which could be an RFP, RFQ, or RFT. Large opportunities will need an RFP, especially if the opportunity is only for design/engineering and the construction scope of work is treated as a separate project.
Certain industries – such as Engineering and Construction use the same acronyms (“RFQ” and “RFI”) but understand them very differently than others.
However, an RFP can also be used to initiate an opportunity when the issuer wants to get the largest possible number of respondents – either from the public or from an updated preferred vendors list. This is especially useful when the scope of work is clearly known and the design is complete. Some examples would be for replacing equipment, goods, and service providers.
The output of the RFP will either be an RFQ for simple responses (such as a single price) or an RFT (for a full tender, broken down by discipline and area).
In the major infrastructure world where I come from, the RFP would either be for design alone with construction as a separate project (“Bid-Build”) or a combination of Design and Construction (Design-Build or another variation such as DBF) or even include Operations and Maintenance (such as a DBFOM).
If Design and Construction are combined in an RFP; then pricing likely will be included in the response – which turns the RFP into a full tender. In these situations, there won’t be an RFQ or RFT after the RFP because the RFP is the RFQ or RFT.
A Request for Quotation (not a Request for Qualification) simply asks for pricing for commoditized items that are easily comparable. They are used to quickly compare the quotes from multiple respondents to either identify a winner or establish a benchmark to determine the price range of the desired product or service. They do not need a pre-existing RFI nor RFP if its open to the general public and there’s no need for a prequalified vendor list or design (such as for lawnmowing services).
For example, the provision of 200 computer laptops for a school with identified specifications (Intel i7-8550U core, 16 GB DDR4 RAM, 1 TB SSD, 14-inch full HD display, Windows 10) simply requires a quote. It does not need to know how the respondent will assemble the computers nor how it will integrate them into the school’s infrastructure. Neither does it need the provision of an HSE plan nor a risk management plan.
An RFP requires creativity. If a school is asking for 200 computer laptops but does not identify what the specifications are supposed to be, and is asking for the respondent to propose specs as well as configure each one with the school network using the issuer’s preferred software; then the package will be an RFP and not an RFQ because there cannot be any direct comparisons between respondents. One may propose using 1 TB SSD while another will propose a 500 GB hard drive. One will suggest 16 GB of RAM while another 32 GB.
The issuer will then need to evaluate the merits of each proposal instead of a simple cost comparison, where the lowest bid wins. Is it better for the school to select the respondent whose computers are $50 more expensive but its hard drive and RAM are twice as large? Does the inclusion of 8 GPU cores on the processor of one bid justify the added $30-unit cost? Does the two-year protection plan of one proponent make it a better return on investment?
This difference is as follows:
- Only price submission for straight comparison = RFQ
- Price submission and various conditions for evaluation = RFP
A Request for Tender (RFT) is the older sibling of RFQs – it requires a cost breakdown by discipline and area. They are usually sent to prequalified vendors instead of the general public due to the level of estimating effort needed to properly respond.
If the RFT is only asking for pricing (usually by requesting specific forms to be filled out), then it is strictly an RFT. But if it is asking for an execution plan, schedule, and numerous other information that goes beyond pricing; then it is an RFP
Now you know the difference between RFI, RFP, RFQ, and RFT.
Please contact Boardroom Metrics if you need help with creating or responding to an RFI, RFP, RFQ, or RFT.