The Complete RFP Guide: Everything You Need To Know Before Launching Your Next Request For Proposal
A Request for Proposal (RFP) is a document organizations create to outline vendor requirements for a specific project. It helps to ensure transparency, and it also serves as a benchmark to determine the success of the project.
The RFP process usually consists of two stages:
Determining the requirements (by gathering input from all project stakeholders);
Drafting the RFP.
It may seem like a simple process, but it’s not without importance. In fact, a well-written Request for Proposal is one of the most important factors that determine the success of a project.
Below, you will find a few aspects you should keep in mind before drafting your next RFP. But first, let’s ensure you are using the correct terminology.
The RFI (Request for Information) is a document you send before the RFP to gather information about possible suppliers and solutions / products / services. RFIs are used as an initial step to filter out vendors that clearly don’t fit your requirements, so when you’re ready to launch your following round like RFQ (Request for Quote) or e-auction, you can do so with as few suppliers as possible (this will make it a lot easier to choose one).
At the same time, having an RFI process in place lets suppliers know that the bidding process will be fair. If the organizations invited to bid don’t have a realistic chance to win, they will quickly realize it, and participation will ultimately decline.
Unlike RFPs, which allow suppliers to come up with creative solutions, RFQs (Request for Quotation) are documents that organizations use when they’re looking for a supplier who can implement a solution using predetermined specifications. As the name suggests, the main criterion buyers will use to differentiate between suppliers is the price.
RFQs are best suited to products and services that are as standardized and as commoditized as possible, so quotes can be compared apples-to-apples before contract negotiations begin.
Now that we’ve gotten the RFI and RFQ terms out of the way, it’s time to concentrate on how you can write better RFPs. And it all starts with the right preparation in order to come up with the best questions to include in it.
To be able to draft good RFP questions, you should consider the following:
1. Aligning with possible suppliers
You don’t want to choose just any supplier; you want to choose the best-fitting supplier. You may need an e-auction for that, but before you organize one, you need to make sure your goals and suppliers’ capabilities actually match.
2. Focusing on your immediate need
Don’t ask questions that are beyond the scope of your project. This not only makes it easier for suppliers to respond to a Request for Proposal, but it also makes it easier for you to evaluate their responses.
There’s an exception here, though. If you haven’t qualified your suppliers before launching the RFP (through an RFI), you may want to draft a few questions that are meant to assess the overall organizational capabilities of your suppliers.
3. Keeping your questions open but concise
If you’re too specific, the answer may not touch on all the areas you’re interested in. But if you’re too generic, you risk getting a stock answer. You need to give suppliers a chance to prove their expertise.
The more concise you are in the number of questions you ask, the easier it will be for suppliers to produce insightful responses. Don’t use sub-questions or combine more questions into one. Ask only one specific question at a time — this will allow you to easily compare responses later.
Depending on the answer you’re hoping of getting, there are three different types of questions you can use:
Single-choice questions: suppliers can only choose one response from a predetermined list you define; this is a closed-ended question.
Multiple-choice questions: suppliers can choose multiple responses from a predetermined list you define; this is a closed-ended question.
Free text questions: suppliers can provide any answer they choose without you forcing them to select from specific options; this is an open-ended question.
Asking the right questions is critical, but asking them in the right way is also important as it can help you save time and effort when analyzing responses.
If you want to learn more about how you can better draft RFP questions, check out this article.
To ensure the success of your e-auction event, you need to:
1. Provide clear guidelines for the entire sourcing project
Providing a detailed overview of the ground rules and steps of the process is of paramount importance. Being thorough and explaining the guidelines from the onset can save you plenty of time down the road when you don’t have to spend time dealing with miscommunication or, even worse, complaints.
2. Bring internal stakeholders on board
Make sure that everyone from your organization who should be involved in the process is involved. Make it very easy for internal stakeholders to have constant access to updates and developments.
With Prokuria, internal stakeholders can have a clear overview of an acquisition from beginning to end at the press of a button.
3. Be clear on priorities and evaluation criteria
What is most important to you — that is, what MUST you have? What other aspects are merely desirable, “like to have” items you can live without? Being clear about these criteria, and ranking them by importance, helps both you and the supplier in setting expectations.
You’ve drafted your RFP, now’s the time to determine how you’ll actually select the winning supplier. If you want to have a methodology for that and not just leave it to a free debate between stakeholders and a subjective selection, you must use a scoring matrix. This will help you easily choose the winner in a way that’s aligned with stakeholders’ priorities and assuring an impartial and transparent process.
There are multiple ways you can do RFP scoring:
1. Basic scoring
To do a basic scoring, you need to give each criterion a score, generally from 1 to 10. Each criterion is given the same weight — they are all equally important. However, this is frequently not the case when evaluating proposals, which is why basic scoring is not always the best method.
This method gives each criterion a weight by assigning it its own scoring scale. One criterion might have a maximum score of 10, while another might have a maximum score of 15. Although this method allows various criteria to be weighted differently, since they’re measured on a different scale, it can become confusing.
3. Distinct weightings
This method allows each criterion to be measured on the same scale. Also, each criterion has a weight by which the score is multiplied to give it a total weighted score. This makes RFP scoring easy and ensures that the most important criteria are given proper consideration.
4. Hierarchical structures
The more complex an RFP is, the more detailed the evaluation method needs to be. A hierarchical structure makes it possible to group criteria. Each category and subcategory will be assigned a score and a weight relevant to its importance.
5. Lowest cost compliant
If the technical aspect of the RFP is critical, you need a method to evaluate proposals based on the technical requirements of the project. Using this method, a proposal will move beyond the first stage of evaluation only if it receives a minimum pass mark based on the sum of the weighted technical scores. Any proposals that make it past this stage will then be considered based on the cost; the lowest cost provider will be awarded the contract.
6. Price/cost per point
The proposals are first evaluated based on technical requirements; then, the technical scores are averaged. This results in a combined quality score. In the second stage, the proposals are evaluated based on the cost/price per quality point. Usually, the provider with the lowest cost will be awarded the contract.
7. Best value
Technical and cost criteria are each given a weight. For instance, the price might be 20% and technical 80%. This way, technical criteria are given considerably more weight than the cost, which is the best scenario when dealing with products and services that are more complex.
Manual RFP scoring takes a lot of time and effort. Not to mention that it might not be the most accurate way of selecting the best supplier.
RFP scoring software streamlines this process so you can increase the number of RFPs you can process yearly, thus increasing your revenue.
The right software also makes it easier to eliminate suppliers who don’t fulfill your requirements from the very beginning and ensure transparency. Not to mention, you eliminate guesswork.