As a project manager or procurement team member, you always need to source the best services and products that fit your needs. That also means you need to be in touch with the best suppliers/vendors that can help, and that’s where a request for proposal or RFP comes into play. Knowing what RFP stands for and how to manage one from start to end is very important, and we are here to help you uncover the information you need.
What is an RFP?
RFP stands for Request for Proposal. The request for proposal is a business document that outlines the scope of a project and the services that a company is looking for. The idea here is that you’re announcing a new project and are inviting vendors and suppliers to bid for that project. When you create a request for a proposal, you share project details with vendors who are interested in bidding for the project.
It’s important to keep in mind that a request for a proposal helps remove any bias from the bidding process while opening up competition between vendors. This allows the RFP creator to access a large number of vendors and get the best pricing and service available.
Who is an RFP useful for?
Any project manager or procurement team that needs to source products and services can send out a request for proposal to compare vendor offerings and select the vendor that best meets their needs. Industries that most often use RFPs include:
- Community Associations (HOAs and Condos)
- Property Management Companies
- Heavy Industry
- Healthcare Procurement
What types of RFx are there?
Understanding what an RFP means is extremely important for someone that manages a project. Why is that? Because it helps them figure out what vendors they can use, while also opening up a bidding process to find the right vendors. There are different RFx types too, all of which have a very specific purpose.
Quotes are very important because they can help provide pricing or payment details/terms. You always want to know exactly how much it will cost to hire someone for a project.
The request for information is imperative when it comes to collecting general info from a vendor. The RFI can be a very good option because it helps explore various solutions, while also planning how you will spend your money. While this is not mandatory when it comes to selecting a vendor, it can offer more context and details regarding their offer.
A buyer survey is usually sent to the organization members. The purpose of a buyer survey is to help gather information before creating any request for proposal or auction. Even if the buyer survey is optional, it can be very helpful since it shows project managers what’s needed and what vendors need to be inquired about. That might also help gather any information vendors need to know before they place any bid.
RFP Creation Process
Now that you understand what an RFP is and how you can use it, your next focus needs to be on creating the request for proposal document. But how can you create, manage and publish the request for proposal? Here are the things that you need to focus on!
Creating the request for proposal
Before you start asking for any bids, it’s very important for you to focus on the RFX process. The first thing you want to do at this time is to first create the document. That means you need to gather information about this project and see what your project needs at this time. You need to be certain that your goals are clearly defined, along with your budget and scope. Once you set the right expectations in the RFP document, you will have better vendor responses, and you’ll also receive more vendor participation too. Another benefit here is that you can filter vendors that don’t meet your requirements.
After you gather information, it’s important to establish a timeline. Create key milestones for your project and assign dates to the project as needed. When you have a proper timeline in mind, it will make vendors more confident, and you can focus on delivering exceptional results for your company or clients in the long run. The next step is to write the request for proposal. Here’s what a typical RFP structure looks like:
- Introduction and project background – Explain what your organization is about, the project you’re looking to implement, the current state of your project, and your goals.
- Submission Requirements – Let vendors know the process for submitting an RFP such as how long an RFP needs to be, how long any quotes need to be active for, etc.
- Description – This is where you outline in more detail what your project is about, targets and milestones, and deadlines.
- Scope of Work – The Scope of Work details what the vendor will be responsible for performing, the criteria, and any contingencies. It also generally lists steps that need to be completed in the project.
- Timeline – The timeline sets for expectations on when each step of a project should be completed and is usually formatted in a table or Gantt chart for more complex projects.
- Budget – Set a budget for your project.
- Evaluation Criteria – List all of the criteria that you will be evaluating vendors’ RFP proposals on. For example, any credentials/licenses required, insurance requirements, past projects they worked on, and more.
Managing your request for proposal
Once you publish your request for proposal, you can expect vendors to ask questions. You should always ensure transparency and fairness by replying to each vendor. Sending reminders close to the RFP deadline can help to improve your response rate.
Evaluating your request for proposal
After you received multiple replies to your RFP, you want to see which is the best option. A good way to handle this is to score the proposals. If you have upwards of 3 proposals, it’s a good idea to use the scoring process in order to narrow down which option is most viable. Creating an evaluation criterion and scoring system will make the process significantly easier and more convenient.
We also recommend reviewing the pros and cons of each vendor proposal, so you can see what works for you and which vendors are delivering the most value. When you evaluate vendor proposals you want to be certain that their documentation is up to date. If you’re working with uninsured vendors, your organization risks becoming liable if any injuries occur.
The project goals and scope are important when you create a request for proposal, as that’s what will provide vendors with the tools, systems and resources needed to complete a specific project. It’s imperative to review the RFP with your team internally and ensure you shared all the necessary information.
Benefits of RFP Software
The request for proposal system is a great way for you to send RFPs to vendors, evaluate their responses and also communicate with them.
Organize your RFPs in one place
An RFP system unifies all activities related to an RFP including documents, conversations, and updates, enabling your team to stay focused. A centralized system eliminates the need for your team to search email or spreadsheets for the latest updates. Your procurement team will always have the latest up-to-date information on an RFP.
Get more competitive bids
Having an RFP system in place usually brings more competitive bids by being able to send RFPs to multiple vendors. Plus, it also allows vendors to fully understand your needs and receive all the information they need so they can provide you with the best service offering.
Create strong vendor relationships
With an RFP system, you can track key vendor information and communicate them frequently, enabling you to build trust and transparency with vendors. Additionally, tracking information such as ratings and licenses ensures that you select the most appropriate vendor.
What is RFP Plus and how can we help?
If you want to have a smooth RFP process, then it’s a great idea to use specialized software, and that’s where RFP Plus comes in. Our software is designed from the ground up to help optimize and customize your RFP process. We help you organize everything in a single place, from sending RFPs to vendors and managing any proposals that you receive.
With RFP Plus, you will find it a lot easier to keep your team focused, while also making it easier to communicate with vendors from start to finish. On top of that, you can enhance your vendor relationships, while also tracking license expirations and viewing vendor ratings. RFP Plus also provides dedicated onboarding support and customer assistance too, so if you have any questions or issues, you will receive help as quickly as possible.
Once you understand what an RFP is you can easily see that a lot of work is needed to manage this entire process. Managing an RFP always involves constant communication with vendors, starting with sending invites, and it ends when you award vendors at the end of the process. Attention to detail is vital here because it will help you narrow down the best vendor for your business.
That’s where software like RFP Plus can be very helpful. We are here to help procurement teams and project managers streamline their request for proposal experience, while also preventing costly errors and miscommunication. With help from RFP Plus, you can create an exceptional request for a proposal and find the best vendors to fit your needs. If you’d like to learn more about RFP Plus, you can schedule a personalized 1:1 demo.