Growing a business

What is an RFP?

Suppose a business is considering undertaking a complicated project that requires outside expertise and resources. In that case, many organizations will use a request for proposal, or RFP, to acquire the needed professional services. Such documents offer a straightforward way to solicit work from experienced parties, making them an invaluable tool to have in your small business’ toolbox.  

This article covers what a request for proposal RFP does, who uses this request, what should be included in the document, and a downloadable request for proposal template free to use. 

Request for Proposal – RFP Meaning

A Request for Proposal, or RFP, is a document that a business creates to publicize a future project, or job, to potential contractors or companies that can help complete the project. This proposal is announced publicly to solicit others to make bids for the work in question. 

A request for proposal is usually the first document created to launch the project. It calls forth prospective contractors interested in working with the company and provides them with the opportunity to bid for the project contract.

It is up to the businesses announcing their RFP to select one of the proposed bidders to conduct the project based on the criteria they have put forth in the request. 

Request for proposal example

Ethan is the restaurant owner of a chain of fine dining locations called Ethan’s Eatery. He is looking to update the POS system and inventory system for his entire chain of restaurants using a custom-built solution. With such a large undertaking of internal processes, Ethan wishes to secure the expertise of professionals, as he cannot do this specific project himself. 

Therefore, Ethan might decide to create an RFP, announcing to local contractors and IT businesses that he is looking for a third party to oversee this extensive project. In this case, Ethan would outline what he wants for his inventory and payment systems, including his budget, time frame, and the standards to judge submitted proposals. All of this information would be placed in the restaurant’s request for proposal. 

Once finished, Ethan can publish the final proposal online using a local procurement website or portal to do so. 

RFQ vs. RFP vs. RFI

An RFQ, or request for quotation, is a document, businesses use to solicit products or services from public suppliers or suppliers. An RFQ lays out the specific quality and quantity needed for a product or service that suppliers can bid for, including an itemized list of prices. This differs from RFPs, as it only covers the cost of services or products required, not the project in its entirety, and typically comes after the RFP in the bidding process. 

On the other hand, an RFI, or request for information, is created by an organization when conceptualizing a future project, service, or product needed. This happens at a different time in the bidding process, coming before the RFP. 

Overall, both a request for quotation RFQ and request for information RFI are shorter, less complicated documents that either educate the suppliers and bidders or quantify what is needed of them. 

Who Uses RFPs?

Many government agencies use an RFP request to solicit work fairly and openly. Public businesses, private companies, and non-profits also use this unbiased process for selecting the right suppliers for the proposed undertaking. Typically, organizations of all kinds will request proposals when the project is a lengthy and complex undertaking.

What Does an RFP Do?

Businesses use the RFP process to announce projects and provide an opportunity for interested and qualified suppliers or contractors to bid for the project in question. 

An RFP will set out specific guidelines that the bidders must cover when submitting their proposals for consideration. This request should be as transparent as possible, so all potential bidding parties have a clear understanding of what will be needed of them. 

What Should Be Included in the RFP Process?

Generally, requests for proposals will cover all aspects of a project, no matter the job or industry it is used in. For that reason, the RFP process should be thorough and describe the entirety of the work needed, including information on the company requesting help, the tasks required from the bidders or suppliers, and the criteria by which they will be judged. 

With this in mind, a request for proposal RFP should include the following:

  1. Project Summary: An overview should be placed at the beginning of an RFP, summarizing the scope of the project, and touching upon all aspects below. 
  2. Company Information: It is best to include background information about your business, including your mission statement, industry competitors, and the products or services the company offers. Providing this overview will help those submitting to tailor their approach to the project with your mission in mind.
  3. Project Objectives: Be sure to outline all project elements, tasks, and deliverables required to complete the proposed undertaking successfully. 
  4. Selection Process Schedule: State how long the selection process to find the right bidder will take, even if it is an estimation. This allows the potential supplier to glean an idea of how long they will need to wait to hear a response from the procurement process. 
  5. Selection Criteria: List all expectations of suppliers that must be met to be successful in their bid. Note what skills, experience, and level of expertise is needed to finish the project in mind. 
  6. Requirements for Proposal: Outline what is needed of the bids, including when and where to submit proposals, deadline for submissions, specific aspects of the project, and how the bidder would approach and complete each step.
  7. Project Timeline: State the time in which you wish to start the project, and what deadlines you would like to keep or aim to conclude by, with a specific time frame in mind. Companies can either propose a hard deadline that bidders must meet or offer a soft deadline, allowing some flexibility to find the right candidate. 
  8. Possible Setbacks or Risks: List all potential risks or obstacles that the project could run into or that potential suppliers might face. 
  9. Project Budget: State the total budget for the entire undertaking so suppliers know how much the job will payout before they bid for it. 

Therefore, to create a detailed request document and ensure a well-thought-out project scope, your organization should aim to include all information stated above. Companies can use an RFP template to make this process easier. 

RFP Template

Feel free to download this request for proposal template to be used by your small business when announcing your next project and starting the procurement process. 

Such templates can also help suppliers and bidders get ready for a job. By familiarizing themselves with this request’s structure, they will be better prepared to answer the call when it happens. 

What Happens After an RFP Has Been Approved?

Finding the right contractor or supplier for a project can be tricky. Sometimes government bodies or businesses can take ages sifting through all the proposals and deciding on the right one. So it’s essential to make RFPs as detailed as possible to ensure the best candidates. 

Whether selecting a contractor or bidder for your business’s RFP or proposing a bid yourself on party’s proposal- companies can easily send quotes and proposals using QuickBooks Online. This quality accounting software offers a comprehensive set of features that can help small business owners succeed. 

Once a bid is accepted, make sure you’re ready to go with accurate project costing and progress invoicing to get your project off to a good start. With QuickBooks Online’s expense tracker, progression invoicing, and time tracking software, your company can hit the ground running. Try it free today!

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