A request for proposal (RFP) allows you to collect offers from various vendors who can provide goods or services your business needs. To identify the right vendor, you need a detailed RFP to quickly and efficiently evaluate vendor capabilities.
What Is a Request for Proposal (RFP)?
An RFP is a document you create when buying products or services from vendors. You can use this document to openly announce that you have funding available to invest in a program/project or purchase products/services.
Interested companies or vendors respond to your RFP by placing bids. This form helps you gain as much information as possible about the products or services you wish to buy so you can decide who to enter a business contract with.
Benefits of Issuing an RFP:
- A higher number of potential bids
- Greater competition among vendors
- A more organized process for securing a bid
- Greater transparency
Stages of the RFP Process
The RFP process varies from business to business, but in general, it comes down to four stages:
1. Discovering Your Business’s Needs
The RFP process begins with discovering a need for your business. Consider what services or products you’d like to purchase and how they can improve your company’s operations.
Once you identify your company’s needs, you can think about how an eventual purchase may affect the company’s current budget, other ongoing projects, internal departments, and existing business partnerships. Also, consider who could manage the RFP process to ensure it goes smoothly.
You’ll want to set up a meeting with relevant stakeholders to discuss pertinent information.
2. Writing and Sending the RFP
The second step is the writing and issuing of the request for proposal. It needs to be thorough and well-written so vendors understand the project and can provide comprehensive solutions.
3. Evaluating and Shortlisting Proposals
As vendors send you responses, you’ll want to use the parameters you discussed with stakeholders to score each. Eliminate the bids that fail to meet your non-negotiables, identify unique selling points of different vendors, and shortlist those that stand out.
4. Choosing a Winner and Creating a Contract
Once your deadline for receiving bids closes, compare the vendors you’ve shortlisted to make a decision. Check their strengths and offers against your RFP and look at previous client reviews.
Contact any of the vendors if you have additional questions or think a meeting may be necessary before you make a decision.
Once you’ve identified two or three leading bidders, start negotiating a price, lock in a cost, and arrange a contract with your final choice. Depending on the agreement you’ve decided on, you may want to use a service agreement.
How to Write a Request for Proposal
When you follow a structured process for writing a request for a proposal, it’s much more manageable. You can write a more effective RFP by following the steps outlined here.
Step 1 – Gather the Requirements for Your RFP
Before you start writing, you need to know your RFP’s requirements. These requirements are typically:
- Scope of the project
- Project goals
- Potential limitations
Identify these requirements before drafting the proposal request because it will make writing the subsequent sections much more straightforward.
Step 2 – Add Your Company Name and Contact Information
Your request for a proposal should state who it’s for and how to contact your company.
Step 3 – Provide Company Background and Portfolio
An RFP should persuade vendors to bid on your project. Give them a full picture of your company, including your history, mission, goals, target customers, sales performance, and other pertinent information to help organizations decide if they’d like to work with you.
Step 4 – Describe the Services or Products You’re Requesting
State precisely what you’d like the vendor to do or provide. If you aren’t sure of exactly what you need, go back to step one and gather RFP requirements again.
For example, if you’re designing a new software program, you might need a software engineer’s services.
Step 5 – Provide Project Details and Project Name
After you’ve indicated the exact products or services you require, please describe why you need them. What will your company do with these products or services, and why should vendors bother submitting a proposal? Also, give your project a name to make it easier to describe.
Step 6 – Indicate the Goal of the Project
Describe what you hope to accomplish with the products or services the vendor will provide. Are you trying to make your business run more smoothly or expand an offering to your customers? Include these goals in the proposal request.
You can also include how you plan to measure the project’s success. This way, the reader will know what to expect going forward.
Step 7 – Set a Scope for the Project
List the volume of products you require or the extent of the services you’re asking for.
Step 8 – Give a Proposed Timeline and Set Milestones
Include a realistic timeline divided into chunks so vendors can easily compare it to their schedules and determine if they’d be a good fit.
Step 9 – State When Bids Are Due
Choose a bid deadline that gives you enough time to evaluate each one carefully.
Step 10 – Provide a Point of Contact for Your Company
Describe how proposals should be submitted. Include the preferred format and specify if vendors should send their suggestions to a specific person or department.
Step 11 – Indicate What a Proposal Must Include
Finally, include elements of a winning proposal. Mention the specific selection and evaluation criteria to determine who you will choose.
Request for Proposal Sample
Check out our free request for a proposal template to start soliciting vendor proposals. Download it as a PDF or Word file below:
Frequently Asked Questions
When should you use an RFP?
If your business has a specific need that can’t be met internally, an RFP can help you bring in external resources that can provide the skills and expertise required.
Is an RFP legally binding?
A request for a proposal isn’t legally binding, but it can lead to a legally binding contract being signed if a vendor meets the requirements of the business searching for services.
What’s the difference between a request for a proposal and a request for qualifications?
The biggest difference between a request for a proposal and a request for qualifications is the nature of the information you request. In a request for a proposal, you are waiting for multiple people to get back to you with a potential bid.
If you ask for a request for qualifications, you already know who you will work with, but you need more clarification about the bid and price.
What are some best practices for creating an RFP?
Some best practices for creating an RFP include the following:
- Be transparent about your goals
- Provide some flexibility and allow vendors to share their suggestions
- Avoid typos and proofreading errors
- Have realistic deadlines for proposal submissions
- Be clear on your budget