Have you heard of the Dunning-Kruger effect? Studies show that the less a person understands a subject, the more likely they are to overestimate their mastery of the subject’s concepts. So, the people who know the least think they know the most.
Fortunately, we can dodge the Dunning-Kruger effect in our organizations. The key is learning both about your field and your organization’s potential.
No potential is infinite. Businesses, government agencies, and non-profits all eventually hit a barrier. They need to execute a project, but the organization knows it lacks the knowledge, resources, or time to carry it out well in-house.
So, it seeks out expert help.
Sometimes, an organization wants a new, specialized product or service to solve a problem. Vendors are businesses, separate from the organization, that may have a solution to that problem.
To connect with these vendors, an organization creates an RFP. The purpose of RFP documents is to solicit proposals from vendors. An organization can then compare proposals and contracts with the vendor that best meets its needs.
What is an RFP?
An RFP is a “Request for Proposal.” It’s a preliminary document.
An organization creates an RFP before a large project or undertaking. Businesses, non-profits, and government departments all create RFPs when they anticipate they’ll need to contract with vendors.
RFPs function as an advertisement and solicitations. When they’re done well, vendors respond to RFPs with proposals.
Purpose of RFP at Its Core
The core purpose of an RFP document is to ensure a good return on investment (ROI). When an organization contracts with a vendor to complete a project, the organization is investing.
At its core, the RFP makes it easier to secure a good return on that investment. RFPs empower smart choices because they seek out multiple proposals. An RFP also defines the project’s parameters.
So, your organization is more likely to receive several proposals that meet your needs in creative ways. To get a good ROI, your organization will compare different vendors’ offers.
Investing less up-front can be a good way to recoup that investment quickly. But, some proposals will be better than others. The potential for a higher return can make the best proposals worth a higher initial investment.
Create and Distribute an RFP
An organization might create an internal committee to develop an RFP. Or, it might hire a professional RFP consultant to orchestrate the process.
To create an RFP, the writer must understand precisely what problem they are trying to solve. They must gather input from different departments affected by the problem. Then, they learn what barriers inhibit current solutions.
An RFP is designed with a budget in mind. It must adhere to a standard format (see below). Ideally, an RFP balances openness to creativity with specificity.
After you draft an RFP, you’ll distribute it. In some cases, an organization distributes an initial RFP draft to get feedback from potential vendors.
This allows writers to catch glaring issues. Vendors may point out unrealistic budget expectations, or they might register concerns about vague language in the draft.
You can consider feedback. Then, you can edit an RFP before you release the final draft.
After revisions, an organization distributes the final RFP version. Before you distribute the RFP, you’ll decide which method you want to use to solicit bids. There are four options:
- open bid
- sealed bid
- invitation only
- reverse auction
There are pros and cons to each method. To seek proposals via open bid or sealed bid, you would distribute your RFP on an RFx database.
An RFx database is a public-access site. It may be run by the government or a third party.
RFx databases ensure transparent and fair processes. U.S. laws require government entities to distribute RFPs via these websites.
The RFx database alerts all member vendors to the new RFP. Often, membership is free, though vendors are vetted to prevent fraud. Then, all vendors can submit proposals, including costs.
In an open bid, everyone can see everyone else’s proposal. This is transparent, but it also risks price-fixing.
In a sealed bid, nobody can see anyone else’s bid. The organization that created the RFP can only read the proposals after the deadline ends.
This encourages the organization to read all vendors’ bids, rather than choosing the first one that sounds good. It also prevents collusion among vendors.
Invitation-only distribution lets a business pre-select which vendors to solicit. The business will deliver the RFP directly to vendors it trusts.
This ensures a high-quality proposal. But, the organization risks overpaying.
A reverse auction solicits bids and proposals. In this situation, the organization must choose whichever vendor sets the lowest price.
The upside is, the process encourages vendors to set their prices as low as possible. The downside is, an organization can’t consider other factors after it receives the bids. The lowest bid is locked in.
What Situations Require an RFP?
A request for a proposal is useful when you want to compare how different vendors would approach your project. RFPs enable a degree of openness to different solutions.
Yet, RFPs still require set parameters. If an organization hasn’t figured out the project’s boundaries, it can’t create a useful RFP yet.
Likewise, an organization may have already settled on a specific solution. So, it won’t get full use out of an RFP.
If you wonder, “When should you use an RFP?” there’s an answer. Use an RFP when you’ve clarified the problem, the parameters, your current resources, and what you want from a solution.
This is when vendors’ proposals will help you take the next step. Before or after that stage, an RFP isn’t exactly what you need.
Instead, consider different RFx documents. Different documents can address different needs inherent to organization-vendor collaboration.
Who Creates the RFP?
Within an organization, teams develop RFPs using different methods. Some organizations dedicate a specific manager or committee to RFP creation. Some hire RFP consultants.
Or, the RFP development team may include lawyers, financial advisors, and sales and marketing team members. Since an RFP contains a budget, executive staff or managers who oversee finances need to sign off on an RFP.
RFP documents are standardized. Government agencies must meet strict, precise formatting standards. These standards specify everything from font to words-per-sub-section.
Businesses and non-profits don’t have to meet these regulations. But, their RFP documents still abide by industry standards and norms.
Long-form vs. Short-form
RFP documents may be long-form or short-form. Short-form RFP documents are a single page. Long-form documents are several pages long.
RFP Specifications (Short-Form)
Short-form RFPs have a header, a body, and a footer. The header includes the following information:
- project title
- company name
- proposal due date
After the header, the body of a short-form RFP is broken into six sections. Organizations must fill in approximately one to two paragraphs in each section. The sections are:
- project overview
- project goals
- scope of work
- current roadblocks
- evaluation criteria and metrics
- submission requirements
After the body, fill out the information in the footer. The footer of a short-form RFP requires three data points. These are:
- project final deadline
- budget amount
- contact information
Short-form RFPs are straightforward and concise. They’re useful when a project is not complex.
You might create a short-form RFP for simple wholesale solicitation. Consider using a template to create a short-form RFP.
In most circumstances, though, you’ll need the long-form RFP. This format lets you convey all the relevant information to vendors.
RFP Specifications (Long-Form)
A long-form RFP document is typically four to eight pages long. An organization develops longer RFPs when it needs to clarify the parameters, or completely explain a complex problem.
While there are format standards, there is also variation. Explore different examples before you choose a format.
Typically, the “Background” and “Scope of Work” sections demand the most detail. But, writers elaborate as much as necessary to explain what they need.
All RFPs include a header with the project name, your organization’s name, and the proposal deadline. Then, RPF writers typically start with the introduction.
Most RFP documents include the following eleven segments. Writers frequently include these sections in the order we’ve outlined below.
The first section introduces your organization. This section explains your organization’s goals and methods.
The introduction should give vendors a sense of the broader goal the project connects to. It also puts forward the organization’s voice. It may highlight the agency’s values.
Tell a story in the background section. This segment gives a brief history of the organization.
It also leads to the problem that you hope the project will solve. Or, it makes clear why the organization’s goals are meaningful. The background section may describe previous attempts to reach the goal, and why they did not succeed.
The project summary is an overview. It describes the project in two or three paragraphs.
It touches on the goals, scope, and timeline. You will expand on each of these elements later.
Develop SMART project goals: specific, measurable, achievable, relevant, and time-bound. Relevant, in this case, means the project’s goals align with the organization’s broader purpose.
Specific, achievable goals stem from accurate perception. Know your resources and creative potential. You can use subsequent sections to describe timelines and evaluation criteria.
Scope of Work (Deliverables)
The scope of work describes exactly what you want from the vendor. This is where you describe the project’s components and qualities.
For each deliverable, describe your goals for its elements. These include:
- Design (Form)
Some organizers elaborate further in this section. They may write a summary paragraph tying all deliverable components together.
Deliverable Schedule + Timeline
To develop a timeline, start with the final deadline. Then, work backward. Determine a reasonable cause and effect.
This way, you can schedule deliverables in a sensible order. Each step in the project will pave the way for the next step.
Leave time in between steps to evaluate each deliverable. This way, you can revise without rushing.
Current Barriers and Roadblocks
In this section, describe the barriers your organization faces when it tries to meet its goals. Legal, financial, social, and interpersonal barriers are all worth examining.
Noting barriers encourages vendors to circumvent these issues in their proposals. It also prevents your team from being blindsided by hurdles. Instead, you can prepare.
This section states budget boundaries. It tells vendors how much your organization is willing to spend.
Evaluation Metrics and Criteria
This section details how you will evaluate proposals. Criteria detail every element you value in a proposal. It might be “energy efficiency” or “creativity.”
Different projects will have different criteria for success. Your metrics are your evaluation methods. Metrics quantify success according to criteria.
So, you might evaluate energy efficiency by the number of megawatts of electricity the saves. You could evaluate creativity on a 1-10 scale.
This rubric empowers vendors. It’s easier to develop a good proposal when one knows what criteria determine “good.”
Submission requirements are step-by-step instructions. This section tells vendors exactly how to submit a proposal. It can include file types, technical specifications, and submission methods.
It may seem overly detailed. But, it’s the best way to make sure you receive all submissions.
Choose one individual as the point of contact. You might choose an RFP consultant.
Name this person in the contact information section. Then, include a phone number and email address. Vendors may contact your organization with proposals, or they may ask clarifying questions.
RFP Templates and Examples
RFP documents are standardized enough that it’s easy-to-use templates. Templates are frequently compatible with Google Docs, Microsoft Word, and Apple Pages.
This RFP template is for Google Docs. It specifically empowers organizations to begin training around a new product or process.
Government agencies and departments create RFPs to begin a project. As such, some provide sample RFPs. The Environmental Protection Agency showcases two RFP samples to illustrate what an excellent proposal entails.
Different state governments provide RFP templates to their agencies. Some of these templates include categories specific to that state.
States include these categories in addition to the generally applicable RFP sections. The State of Maryland provides this template to create a long-form RFP.
RFP Development and Beyond
The purpose of RFP documents is to articulate complex problems. The purpose of Nizek is to solve them.
Whether you need a mobile app, product design, or expert research, we can make it happen. As tech and design experts, we tailor each solution to meet your unique needs.
Want to learn more? Why not give us a call? Your free consultation is only a few clicks away.