The ‘Request for Proposal’ (RFP) is the most popular means of starting a formal proposal cycle – requesting that vendors deliver proposal to meet their specified requirements.
A second document, the ‘Request for Information’ (RFI) is also common. The RFP is undoubtedly the more important of these two documents. However, there are subtle differences between them that define what the client is trying to achieve – so it is critical to know the difference between them an RFP and an RFI before you consider developing a proposal for the client.
Request for Proposal (RFP)
A Request for Proposal (RFP) is a document that describes a perceived client problem, and requests that selected vendors propose comprehensive solutions to that problem, using a proposal as the response mechanism. An RFP says, “Here’s my problem, how can you solve it?”
The RFP, which in larger organisations is often prepared by an external consultant, is generally prepared when a decision has been made to proceed with investment in certain required products or services. Where an RFI cycle has already been completed, the RFP will often consist of a blend of the best and most desirable ideas and technologies from multiple responses submitted to the Request for Information.
The general purpose of a Request for Proposal is to describe the requirement in as much detail as the client, or their consultant, is capable of, and to generate competition for the business of meeting those requirements. It is very much the client’s view of the client’s problem, designed to allow them to solicit the best solution at the best price possible.
It is important to note that where a vendor is to be selected on the basis of a formal mechanism such as an RFP cycle, it is common practice for any commitments or guarantees made in the successful proposal to become part of the final contract for the required products or services, particularly if nothing changes in the stated requirements.
So, responses to RFPs are often considered to be binding on the respondent. In this sense, an RFP requires a much more considered response than might be required where the business has been generated on the basis of less formal sales and account development activities.
Depending on the practice in your target industry or country, a Request for Proposals may also be used in a manner not dissimilar to RFIs — to collect information on the various ways in which vendors might meet the issuer’s requirements. Where they are used in this manner, it is often to feed an even more formal proposal request mechanism such as a Request for Quotation (RFQ), or an Invitation for Bid (IFB), both of which are discussed below.
Where this is the case, an ethical buyer will indicate if information collection is the sole purpose of the Request for Proposal, allowing you to qualify whether or not it is worth your while responding, in much the same manner as you would with an RFI. You may even want to consider discussing with the client whether they might consider paying you for your proposal response — if the information you are providing has a reasonable value to them.
Request for Information (RFI)
A Request for Information (RFI) is a document which generally results from research by a client into the nature of an existing organisational or commercial problem, and into viable ways of addressing that problem.
An RFI is generally issued to test whether the solutions that the client is considering are possible and practical, or simply to determine in what ways different vendors might meet these requirements. It may often be viewed as a “reality test” undertaken before any decision to purchase or invest is made.
Where a potentially large investment might be undertaken, the RFI cycle is often viewed as a means of ensuring that there is no wasted investment in preparation of an ill-considered Request for Proposal.
A good RFP can take a lot of time, effort and, consequently, money to produce, whether produced in-house or by an external consultant.
Before making this investment, many responsible buyers considering a larger acquisition will often go through the RFI process.
An RFI is viewed by some potential proposers as a free consultancy exercise where they are requested to invest time and effort, for which they would normally expect to be paid, in the production of a response which effectively educates the client on probable solutions to their problems.
RFIs can pose problems for proposers in deciding whether they are prepared to make this sort of speculative investment in developing a relationship with a client in the interest of winning business that is not yet “real” – where there is no clear decision to purchase or invest.
However, as an RFI is often the precursor to a Request for Proposal, potential proposers must make this decision carefully – non-participation in the RFI cycle will often call into question the vendor’s interest in the business, and may disqualify them altogether from the later proposal process.
As experience shows that much of the original RFI document (particularly in relation to the client requirement or problem) frequently survives into the RFP, participants in the RFI cycle can often gain something of an “inside track” when it comes to preparing their proposals.
Indeed, it is not unusual that clients are so particularly impressed by one submitted response to an RFI that they will skip the RFP phase altogether, going straight into formal proposal with the favoured RFI respondent, on a “preferred or sole vendor” basis. So, the decision as to whether to participate in an RFI cycle or not is an important one which should not be undertaken without careful consideration.
One final point: a RFI, or a response to an RFI, is generally considered to be non-binding on either the issuer or the respondent.
Other Ways of Requesting a Proposal
Whilst the Request for Information and the Request for Proposal are the most common proposal request mechanisms, there are others which you may also encounter, depending on your business focus, the size of your target deals, and your country of operation.
Request for Quotation (RFQ)
An RFQ is a variety of RFP, which requests a proposal for a solution meeting the issuer’s needs in a prescribed manner. The issuer’s requirements are generally more structured and detailed than those found in a conventional Request for Proposal, and the RFQ may even detail specifically how the requirements must be met. RFQs are similar to RFPs in that responses to them are generally considered to be binding on the respondent, unless the requirements specified change.
Invitation for Bid (IFB)
Often known as a Request for Bid (RFB), an IFB is like an RFQ in that it requests a proposal for a solution meeting the issuer’s needs in a prescribed manner. It differs, however, in that it generally also specifies a date for the successful bidder to begin supplying the proposed products or services. These are generally non-negotiable and considered binding on both issuer and respondent.
While RFQs and IFBs are used in certain circumstance you’ll find that the Request for Proposal is what will drive most of your formal proposals – be sure you understand them well before you rush to write your proposal.