What is a Request for Proposal (RFP)?
In the event that you want to begin a construction project, you may be tasked with sending out a request for proposal, which is a kind of formal business document that provides extensive details about a construction project while also soliciting bids from contractors that could assist with completion of the project in question. Governments and organizations will commonly use RFPs in order to obtain multiple bids. By receiving multiple bids, it’s possible for the entity to select the lowest bid.
Keep in mind that a request for proposal can also provide an extensive outline on how a business proposal should be structured and prepared. Instructions can be provided on the kind of information the bidder must include as well as the format that they would like the proposal to be in. When you want to create an RFP, you can start by drafting the document, which can include the financing, construction, design, operation, and maintenance of a building. Any interested parties will then submit proposals that match the guidelines that you’ve placed within the initial request for proposal.
This aspect of the construction process is typically submitted once you’ve decided on the type of construction project you would like to complete but before the project has been fully designed. An RFP will be sent at the beginning of the procurement process. A request for proposal is different from a request for information since the latter only involves requesting information about certain details of a project. When a construction crew requires some information from an architect, they will send a request for information. A request for proposal is more official and is usually meant to obtain bids from multiple sources. Before you start a construction project, consider reading this article, which offers a comprehensive guide to RFPs.
- An RFP is an important business document that provides extensive details on your project at hand while also obtaining bids from multiple sources.
- RFP’s come in numerous shapes and sizes depending on the both the type and amount of work needing to be performed.
- For complex projects, an RFP may be necessary.
What Goes Into a RFP Request for Proposal?
An RFP can come in all different shapes and sizes. The exact look and size of your request for proposal depends on the type and amount of work that needs to be performed as well as the exact needs that your company has. However, there is a basic structure that you should adhere to for a streamlined process. Towards the very top of the RFP will be some basic information, which includes:
- The name and description of the project at hand
- Your company name
- Your address
- The city, state, and zip code
- The telephone number and email address of the procurement contact person
- The name of the procurement contact person
- A fax number that you can be reached at
The first aspect of the request for proposal should include a project overview, which provides prospective bidders with a general summary of what the project will entail. The bidder should understand what you require from the project if you want them to deliver a favorable proposal. This aspect of the RFP is relatively straightforward and should summarize some of the details that are included in the remainder of the document.
Project Scope and Goals
The next thing that you should do is to outline the scope and goals that you have for the project in question. The goals that you set will allow bidders to have a better grasp of what you want the finished project to look like. Make sure that you’re very specific in this section of the RFP. It’s possible that criteria will need to be set for individual tasks. The size of the project must also be clearly detailed. In order for bidders to send back a proposal that matches your specifications, they will need to be aware of how large the project will be, which is the only way to calculate costs.
Anticipated Selection Schedule
The vendors that you’re requesting proposals from will need to have a sufficient amount of time to answer your proposal. If the response window is too short, you likely won’t receive many proposals. Along with a standard deadline for when proposals must be submitted to you, it’s also important that you provide vendors with a window of time when they can submit and ask questions pertaining to your project. If you want detailed and accurate proposals, it’s in your best interest to answer these questions and clarify any uncertainties. Make sure that you also provide information on how proposals can be submitted. If this information is vague, vendors may find it difficult to get their proposals to you.
Along with setting deadlines for the submitting of proposals, it’s also recommended that you set a timeline for when you would want the project to be completed by. While many organizations and government entities create an RFP for the purpose of obtaining the lowest price for the project at hand, other pieces of information are equally important if you want the project to be completed in a timely and efficient manner.
While one vendor or bidder may offer a low price, it’s also possible that they would only be able to complete the project in 12 months when you want the project to be finished in six months. If vendors and bidders can’t perform the work within your set timeline, you can eliminate them from consideration. Consider being flexible on your timeline. While you might want the project to be completed in a certain period of time, you could also explain that your timeline could be negotiated if the candidate is right for the job.
You must outline exactly what you want bidders to include in the proposals that they send to you. If you don’t detail what these elements should be, you shouldn’t be surprised when bidders don’t include the details you want. Consider providing vendors with a simple checklist of things that you want them to include within the proposal. Once you receive proposals from bidders, any vendor that was unable to complete your entire checklist should be removed from consideration. If they can’t meet all requirements of the RFP, they likely won’t provide you with quality and timely work on the actual project.
Criteria for Evaluation
Along with the elements that you want to be included in any proposals, it’s also important that you provide some criteria for evaluation. In the event that certain vendors don’t meet this criteria, they likely won’t provide you with a proposal, which reduces the number of proposals that you will need to sift through.
Make sure that you speak with your team before including criteria for evaluation. The point of this criteria is to make sure that only impressive and qualified candidates send back proposals. If the criteria is too broad, it’s possible that you will receive an abundance of proposals from vendors that may not have a great reputation. This criteria could include:
- Examples of past work
- Technical skills and expertise that indicates they will be able to meet the demands of the project
- A success record that can be proven
- An overall cost of services
Other Possible Barriers
There are some potential barriers and roadblocks that can occur during a development project, which you should state within your RFP. For instance, you may have limited resources at your disposal, which means that the vendor in question would need to be precise with the items and materials they procure in order to complete the project under budget. When listing possible barriers, it should be easier for you to obtain proposals from vendors that are able to tackle any challenges that occur throughout the project.
It’s at this point that you should include a budget that you fall under. Vendors will need to know what you will be able to pay for the services that they provide. Otherwise, they likely won’t move forward with a bid.
When and Why Should I Use an RFP?
A request for proposal can be highly beneficial when you need to make costly purchases for an important project that you’re about the start. Any vendors that answer your RFP by submitting a proposal will provide you with details that can be readily compared against other proposals you receive. For instance, each bidder will provide you with a cost estimate for the project, which you can then compare with other proposals to select the lowest price.
Sending out an RFP may be necessary for complex projects. If you want to save money and avoid selecting vendors that aren’t right for the project at hand, proposals are a great way to reduce your options and identify a bidder that will be able to handle every aspect of the project. Without making an RFP, you may choose a vendor that has a good price but is unable to complete the project in the given timeline. An RFP is designed to organize and simplify this process.
Along with all of the elements that are needed to create a request for proposal, it’s also important that you understand how to evaluate the proposals that you receive. Make sure that you collaborate with other members of your team to identify the top bidders. Consider placing each bid into a specific category of excellent, good, satisfactory, poor, or unacceptable. From here, it should be easier for you to eliminate bidders that aren’t up to to the task.
Jason Somers, President & Founder of Crest Real Estate
With over 15 years of professional experience in the Los Angeles luxury real estate market, Jason Somers has the background, judgement and track record to provide an unparalleled level of real estate services. His widespread knowledge helps clients identify and acquire income producing properties and value-ad development opportunities.
Learn more about Jason Somers or contact us.