Every organization at some point needs to make bulk purchases, begin new projects or improve their IT infrastructure. In order to make such purchases or access these services, a request for proposal (RFP) is used. According to the definition, an RFP is a document submitted in the early procurement stage to understand and receive vendor proposals for the required solution. RFPs are time-sensitive and change according to developments and company or project growth. This article will help you understand the full meaning of an RFP, the process of creating one, and why it is essential for you.

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What is an RFP?

Before we dive into the details of writing an RFP, it is best to understand what RFP means. A Request for Proposal (RFP) is a business document posted publicly to announce new projects, ask for bids and give out project details to interested parties, vendors or companies. Government agencies and companies use an RFP to explain the scope and goals of projects, create a list of all the necessary requirements, describe evaluation criteria, explain the contract terms and outline bidding processes. An RFP not only opens up competition but also removes any form of bias in the process.

They are mutually beneficial for requesting parties and bidders, as all the information is provided in one go, and both can decide if their demands or requirements can be fulfilled by the other. It allows you to review the financial health of the bidding companies and ensure they can complete the project. It also lets the sponsoring company advise the bidders or vendors on formatting and presenting their proposals. On the other hand, it makes it easier for the bidders to understand what information they should include and the tasks they need to complete.

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Who Uses an RFP?

RFPs exist across multiple industries and can be classified on this basis. For example, marketing, branding, design, website creation, construction, PR and government agencies are some of the many organizations that utilize RFPs. The people or employees that are most likely to write RFPs are consultants, procurement managers, business stakeholders, chief financial officers and project managers. They use it as an opportunity to advocate for their company and business needs. RFPs are complex and need to follow a formal pattern depending on the project, requirements and industry. This makes it imperative for the person writing the RFP to be wholly involved in the day-to-day workings of the project.

For example, a sales representative will not write an RFP for HR software; only an HR staff member or the employee handling HR operations should write it. While higher-ups are generally involved in the RFP process, they are not expected to write it as they have less insight into daily tasks and may not be able to address basic questions, like the success rate of the vendor in the set time frame and budget.

For a vendor, the process is different; the person writing the proposal is generally a junior employee who then gets it cross-checked by a senior executive before finalizing the bid. The junior employee needs to clearly understand the benefits they are offering and any weaknesses in methodologies to address them in the proposal.

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What Should You Include in an RFP?

The format for an RFP is formal and they generally have similar sections included, but some of these might change based on your requirements. Here are some of the basic sections you need to include:

Introduction

Like every book or document, you need to begin by introducing your problem and your company. Here you can summarize the pain point and briefly explain what you need. You simply state the problem and help the vendor decide if they can assist with your needs. You need to remember that the information mentioned here is covered in detail throughout the RFP, so try and keep your information short and sweet.

Background Information

After introducing the problem, you need to give your company’s details, as the vendor may not have heard of you and may not invest the time to search your website. You’ll want to include a brief company history, such as when the company started, who founded the company, where you are located, what services or products are offered and how you are different from other companies in your industry. It needs to be short and sweet while giving the vendor a general idea of the company.

Project Goals

This is an essential portion, as this is where you will mention in detail the purpose of your project, what you want to achieve and the problems you would like the vendor to solve. You need to mention the materials, tools, systems and products necessary to complete the project, especially if you have a particular type or brand that you will require. It can not be very vague, or there is a high chance vendors may not provide the correct information.

Project Scope

You need to convey specifications and create a checklist for vendors to determine if they have the resources to complete the project. Here you have to communicate quantifiable expectations or deliverables so that a vendor can create appropriate strategies to include in the proposal.

Deadlines

You need to have a detailed time frame that explains all the critical milestones throughout the project. If a vendor doesn’t have the resources to complete the project in the set timeline, they can naturally be eliminated. If the vendor doesn’t adhere to the deadlines during the project, you can decide not to work with them.

If you have a flexible timeline or are ready to negotiate the timeline with the right vendor, mention this so vendors can plan accordingly. Having a correctly mapped-out schedule makes it easier for companies to understand if they can complete the tasks in the mentioned time frame. You also need to include deadlines for submitting proposals, evaluating submissions, selecting a candidate, negotiating the contract and completing the project.

Budget

This portion, though not necessary, may still play an important role in selection. Instead of mentioning your budget, you can ask vendors for a detailed expense estimate for their service. You can also ask which services they will charge you for, how they expect payment and whether they accept installments or expect a one-time payment. If you are going to select based on cost, you should mention this and ask for all costs involved.

Questions to Ask Vendors

This is a great section to include, as it helps you get an idea of what all the vendors are offering and whether they are meeting your expectations. It helps if you have questions that you want the vendor to answer and explain what you are looking for from potential vendors.

You can also ask for work samples, proof of their technical skills and success rates for projects with similar requirements. This will make it easier for companies to understand if they can fulfill all the requirements and then provide a quote based on that information.

Evaluation Criteria

You need to share how you will evaluate vendors and how they are being scored before they submit their proposals. This will ensure they know how they are going to fare in the bid selection process. If you are going to use a weighted scoring system, mention the individual weightage for all criteria.

Roadblocks

Every project has a possibility of facing problems, and it will only make sense to let the vendors know what problems they could face when working on the project. This is to ensure that they are prepared for it in advance, and if they lack the expertise to handle any unforeseen issues, they can be eliminated. This saves time and money for you as well as the vendor.

Guidelines for Proposal Submission

In this section, you need to clearly mention what your specifications are when submitting a proposal. For example, include information like where they can access the RFP, the number of copies they need to submit, who they should submit it to and what data they need to mark. You can also clarify the details for digital submission and mention the final date for submission.

Contact Information

You need to mention who is the leader for the project, which team members are involved and who is the principal point of contact for proposal submissions. Specify how you want to receive proposals and mention your email or address for vendors to deliver them to. Without these specifications, you may not be able to receive the proposals on time, and the RFP’s point will be lost.

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Process

Every company may choose to follow a different process, but this is the basic flow of the process and can be changed to suit your needs, company size and industry.

Team Formation

Once you have decided you will outsource for a service, you need to decide on a team or the person in charge of the RFP. If you choose to form a team, you need to include key stakeholders, the person who will research and draft the RFP, an expert to review the proposals and a project manager to ensure everything runs smoothly and on time. Once your team is formed, conduct internal meetings to discuss your goals, identify problems to be addressed, create a budget and set a timeline with adequate time for research, drafting and evaluation. You also need to conduct an initial assessment of the companies who will receive the final RFP to ensure they match your requirements.

Drafting

Once you have completed the research and finalized your goals and approximate budget, you need to draft the RFP. Include all relevant project information into the draft, and answer any questions that a vendor might ask after reading it. When you’re satisfied with the draft, send it to some bidders or an expert for review. Once you receive feedback from bidders or experts, you need to implement suggestions and issue the final RFP.

Distribution

After you have drafted the RFP, you need to share it with potential bidders or vendors. You can share it by creating a web page or via email. The distribution method is entirely your call, but once the distribution is done, remember to keep all the responses in a separate folder or file to not lose them amongst multiple threads or trails.

Shortlisting

Upon receiving responses, you can shortlist a group of bidders that best fit your requirements. Then you can evaluate the vendors based on your selected scoring method and decide to negotiate with two or three of the best options. While selecting the final vendor, don’t forget to look at their strengths and distinguish how they are different from their competitors.

Contract Signing

If you feel the need for a demo or a meeting before finalizing your choice, then don’t hesitate to ask. Check for reviews and contact references, and negotiate the budget and timeline. Once you have completed the negotiations, you can ask them to submit a final offer. Then choose the one that fits you best, and sign the contract with them. It is also essential that you notify the vendors that haven’t been selected.

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How to Write an RFP

RFPs are meant for business and require a great deal of planning. When writing, it is easy to lose focus of what you are trying to get across. The easiest way to prevent this is to create a basic outline of how your document will look and what sections you will include in it. To keep track of information, you need to review and reevaluate the multiple areas of your document. It’s vital to remember that the quality of an RFP may affect the interest of potential vendors. To ensure that you have included all critical points, take notes during meetings, share ideas and answer all questions raised during internal discussions.

RFPs are formal documents, and all the information included in them needs to be brief while explaining exactly what your requirements are and what the vendor needs to know about the project. So how do you do this?

First off, make sure to communicate your needs without any vague or rosy content that will lead you astray and not explain your requirements. Also, keep the use of subheadings and bullet points in mind to make it easier to read. The format is not a mandate and will change based on your projects, but here is a basic structure to follow:

• Title: You need to give an appropriate title for your RFP.
• Introduction to Project/Overview: This is a summary to explain your problem and what help or solution you expect from vendors.
• Company Background: This is where you explain what your company does and provide a brief history.
• Requirements: Here you will mention all your needs, the details of your problem, project goals and more depending on the project.
• Budget: Ask the vendors for a budget cap or a detailed budget, depending on how you will evaluate them.
• Timeline: This section explains the timeline of your project and the timeframe for proposal submissions.
• Barriers: Explain any possible obstacles vendors could face and ask for solutions to overcome them.
• Questions to Address: Questions may seem evident throughout your document, but adding them up in the end makes it easier for vendors to manage each one individually without missing any.
• Selection Criteria: You have to explain to bidders how you will evaluate them so they are prepared to create compelling bids.
• Proposal Guidelines: Explain how you expect them to deliver proposals. You can also ask for a sample of work, projected cost and deadline.
• Contact Information: Share contact details for the person in charge of proposals to ensure easier communication.

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Questions to Ask in Your RFP

When you ask questions they need to be limited and to the point. You should try to include a few yes or no questions so you can filter through proposals easily. Some questions you may want to include are:

• Why should I choose you, and what will you bring to the table?
• What qualifies you to work in this industry? To work for my company?
• Which employees or team members would you task with helping on this project?
• Do you offer a trial?
• What is your implementation process?
• What kind of training do you offer?
• How do you handle customer support?

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Tools and Templates

The benefit of using an automated tool is that it will format the RFP, and you only need to go through it once to make final corrections, which can greatly speed up the process. There are also some set templates that are available online.

These templates follow the basic structure and allow you to customize them based on individual needs. Some of the RFP software available are RFPIO, PandaDoc, Nusii, Loopio, Bit.ai and RFP360.

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Conclusion

The entire process of creating an RFP, from drafting to finalizing the contract, may look overwhelming. Still, with the correct format and the inclusion of relevant information, it may be easier than you expected. What additional steps do you take while writing an RFP? Let us know in the comments below!