A Small Business Guide to Requests for Proposal (RFPs) – The Motley Fool

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by DP Taylor | Published on May 18, 2022
Image source: Getty Images
It’s not the most glamorous part of a project, but the request for proposal process is where your project succeeds or fails — even before it begins.
Get the RFP process wrong, and you risk hiring an unqualified contractor without the skills to complete the project or with an unrealistic plan that causes your project to be heavily delayed and way over budget. By putting a lot of effort into the RFP process, you protect your project from disaster.
Managing RFP bids requires good document control, and it’s a key part of project planning. This guide will describe what the RFP process is and how to put it to work for you.
A request for proposal is a document businesses use to formally announce a project and solicit bids from contractors to demonstrate their willingness and ability to complete it to the client’s satisfaction.
The RFP provides the details about a project, allowing contractors to create a bid proposal describing how they will complete the project and how much they would charge. Beyond project specifics like labor or materials used, RFPs may also include extra details such as the financial health of the bidder.
The RFP process can be broken down into four basic steps.
The RFP should include seven basic elements:
The RFP will vary depending on your industry and the type of project you need help with. However, lots of RFP templates and proposal outlines can be found online, whether you’re trying to do a private bid proposal or a government RFP.
For example, one RFP template I found shows a simple one-page document. It has the title of the project, the submission deadline, instructions on submitting questions, and other details that deal with the beginning portion of the RFP process.
Others are more in-depth and span multiple pages. They reflect more outside feedback and involve more complexity.
RFPs are varied, so explore as many templates as possible and select one that best fits your project.
Projects often involve many stakeholders. Here are a few of the main ones:
While an invitation to bid (ITB) may seem like the same thing as an RFP, and they are similar, they are different. An ITB is focused more narrowly on the pricing of a project, whereas the RFP is more about the overall scope of the project and what is to be accomplished.
The RFP process should always be a dialogue between you and the contractors. You likely will discover that some things you are requesting are unrealistic. For example, if you expect foundation work to be done for a certain price, only to have all 10 responders say it’s half what even the best contractor could deliver, then it’s best to refine the RFP before settling on a bid.
The RFP process is complex and easy to get wrong, so use software to help you do it right. A document management system can help you with records management, legal paperwork, and generally ensuring your business documents are in order.
Whether you’re dealing with government bids or work exclusively with the private sector, a well-managed RFP process will help you get more projects done on time and on budget.
DP Taylor is a business software expert writing for The Ascent and The Motley Fool.
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