If you are new to the world of sourcing, procurement, and supply chain management, then the odds are that you’ve found yourself feeling a little overwhelmed by all of the abbreviations and terminology involved. For example, what is an RFP (request for proposal)? What is the document used for and why are they important? In this article, we’ll tell you everything you need to know.
What is an RFP (request for proposal document) for procurement?
An RFP (request for proposal) is a document that announces an up-coming project, describes it in depth, and then solicits bids from qualified suppliers or contractors to fulfil it.
Many organisations will launch new products and projects using RFP’s and you will also find that a number of governments will always use them as well.
When you are using an RFP, you are requesting bids and then evaluating how feasible they are for the projected being proposed. You need to consider things like the financial health of the supplier that is bidding, their reputation, and indeed their ability to undertake and complete the project for you.
A deeper look at RFP’s (request for proposal) in procurement
RFP’s are often used for the more complex projects that may require a variety of different sub-contractors. This document would go into great detail about your organisation, the full scope of the project that is being proposed, and the type of criteria / bidding terms that you will be using to evaluate any entry bids from prospective contractors and/or suppliers.
An RFP will also include a statement that will describe the tasks that the winning bidder/s will be expected to perform and indeed the timeline for when the project is expected to be finished.
The more complex RFP’s may advise potential bidders on how they should prepare their proposals. For example, if you have a fixed way that you like to operate and are interested in some highly specific information, then you must submit your guidance based on how you expect any proposals to be formatted and presented back to you.
Naturally, an RFP doesn’t need to be so ridiculously over-detailed that it may hinder your potential contractor’s creativity and input and in the same breath – clear enough so as not to leave any potential prospects stumped and unsure as to how to proceed.
Who is typically responsible for issuing an RFP document?
Most RFP’s are used by government agencies and organisations within the public sector – however, they are also used by private and public organisations as well. This is generally done so to remove any potential bias from the process and to ensure that many reputable and capable contractors have a fair chance at securing the opportunity to fulfil the project.
In addition to that, an RFP may also be put out in order to secure multiple perspectives on a project as in the more complex and larger-scale projects, a specialist contractor may indeed be able to suggest a better or more innovative approach.
For example: if you want to change the way that your business operates and wish to undergo a digital transformation, then you may put out an RFP for proposed both hardware, software, and a user-training program in order to both establish and integrate the new system. This is when a competitive bidding process will begin and companies that are qualified to handle such a project may get creative and offer superior alternatives.
Requirements for a request for proposal (RFP)
What is required for an RFP?
- An RFP must be skilfully created in order to ensure the future success of the project
- It must not be too complicated or too vague either – enough detail to inspire the appropriate proposals from qualified parties who are fit to complete the proposed project
- RFP’s should be open to everyone to promote competition and both drive down the cost of a solution and secure a variety of potential alternatives
- Before an RFP process begins you may wish to start with a draft and request feedback from potential bidders (a request for more information perhaps)
- Following that, you can narrow down your selection of bidders to a core group of attractive prospects
- With a smaller “shortlisted” group of prospects you can ask for best and final offers before awarding the contract to your chosen contractor
What are the benefits of a request for proposal (RFP) in procurement?
What are the benefits of an RFP? You can think of an RFP as an advertisement of sorts. You are able to announce that a large project is proceeding and then you are subsequently inviting a wide variety of qualified prospects to offer their services and assistance.
For governments, the benefits of using an RFP is to ensure that there is no nepotism or bias involved and that everyone has a fair chance at offering their services and solutions to the project. The same applies with private and public companies using RFP’s, opening the project up for more prospects, driving up competition and potentially even lowering the initial forecasted costs of the project in the process.
The takeaway
Here’s a quick recap for you:
- An RFP is a project announcement that is posted publicly, allowing prospects to begin bidding
- An RFP will define the organisation in question and the proposed project in detail
- The RFP will go into the goals of the project and outline any required bidding processes and contractual terms
- There are less-formal alternatives to issues an RFP – such as hiring a project manager to accomplish the project. In either case, an RFP can often result in finding exceptional talent with innovate suggestions for a cost-effective budget.
If you are still feeling at a loss, then please do not hesitate to contact us today. UCT (Asia) have a wealth of experience in sourcing, procurement, and indeed issuing detailed RFP’s on behalf of our clients.
