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Everyone, everywhere, wants a good deal — and good quality.
We want a bargain at the car lot, but not on a lemon that won’t survive the drive home.
We don’t want to pay $20 for bananas at the grocery store, but we don’t want half-rotten ones swarmed by fruit flies either.
We want good quality at the best price.
In business, balancing price and quality can get complicated. The things we buy or contract for are complex and nuanced, and so are their procurement processes.
The request for quote (RFQ) process is one way agencies determine which vendor will give them the right level of quality at the right price.
So let’s break down the whats, whys, and hows of the RFQ process.
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Why are requests for quote (RFQs) important in project management?
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RFQs help agencies gather the same information from multiple vendors in a way that’s more streamlined and efficient than interviewing each potential vendor separately. They give your agency a good starting place for deciding on a vendor, contractor, or supplier.
Without an RFQ process in place, your agency might overpay for services or end up settling for an underqualified vendor. This can threaten your own output quality and, ultimately, your profitability.
On the flip side, if you’re responding to an RFQ, then that response is your chance to prove that you’re the best agency for the job. Deviating from the RFQ process likely means missing out on the job or client.
RFQ vs. RFP vs. RFI
If you’re new to the agency world, it won’t be long before you’re fielding requests for all sorts of “RFs.” It’s easy to get lost in a kind of acronym soup here, and worse, many people won’t use these terms consistently or correctly.
Even if others are mixing and matching the terms, they do have different meanings.
RFQ
A request for quote or request for quotation — or invitation for bid (IFB) — is a process companies use to evaluate vendors for projects. It’s more detailed than an RFI but less detailed than an RFP. A good RFQ should provide enough information for the requestor to determine the right vendor for the outlined project or deliverable.
RFQs show up most often in noncreative contexts where innovation and customization are not a big part of the picture. For example, in your agency context, you might create an RFQ when looking for vendors to complete clear-cut deliverables like blog posts or motion graphics.
When the scope exceeds these sorts of parameters, an RFQ may not be enough, and an RFP might be the wiser choice.
RFP
A request for proposal (RFP) is a much wider-ranging document that could contain one or more RFQs, but the primary difference between the two lies in the project scope.
An RFQ works great when you know exactly what you need and just want bids from vendors. On the other hand, if you have a complex project that relies on a lot of different factors, an RFP will give you a more comprehensive view of what each vendor can offer.
For example, an RFP makes sense if you're requesting a fully-formed proposal for an entire months- or years-long marketing campaign. But an RFQ will work better if you’re just looking for a one-off script for a commercial.
In other words, if the “ask” involves numerous facets, deliverables, and unique disciplines, an RFP is most likely the right approach.
RFI
A request for information (RFI) is less specific, more open-ended, and usually shorter than an RFQ or RFP. If you don’t yet have enough information to request a quote or proposal, you may need to collect basic information from vendors and suppliers first.
You might send an RFI to a wider group of vendors as you look to narrow the field down to a smaller group of good-fit vendors (who would then receive the RFQ). Or you could send an RFI when you’re not really sure who you should use or what you need them to do. The responses you receive can help you hone your request.
What are the different types of bids?
RFQs fall into several categories based on how the bidding process works. The four main categories are:
Open
An open bid RFQ is one where respondents can see, in some way, what others are bidding on the project. This is typically the most transparent approach, though it opens the door for price fixing among competing bidders.
Sealed
A sealed bid RFQ is one where only the requestor sees each vendor’s bid — and only after receiving all bids. This method is common with government contracts (from the local to national level).
This approach can work in creative contexts — just remember that price isn’t your only consideration. Qualifications and expected quality matter too, and each vendor’s RFQ response should demonstrate their ability to do the job well.
Invited
An invited bid is an RFQ that you send to a smaller, select group of prospective vendors. This approach makes sense when you already have a set of preferred or vetted vendors and don’t need to expand the pool beyond them.
For example, you might reach out to three or four trusted writers asking for quotes on an upcoming whitepaper or series of blog posts. You don’t care to open the RFQ up to the masses because you’re confident one of your go-tos is up to the task.
This approach is ideal for familiar jobs, niche specializations, or projects requiring knowledge of a specific client or industry.
Reverse auction
Reverse auction bids ask vendors for their lowest price. These make sense in commodity situations where cost is the primary factor and all vendors are likely to deliver similar quality.
The reverse auction is a bad fit for any creative context where quality, originality, inspiration, or feel matters, since this approach tends to focus exclusively on who has the most competitive pricing.
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Three stages of the request for quote (RFQ) process
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The RFQ process, though less involved than its RFP counterpart, is still thorough, and it should follow a somewhat linear timeline made up of three stages.
Preparation
The preparation stage includes compiling your business needs, determining which vendors (or types of vendors) you’ll be requesting quotes from, and building the RFQ document itself. (We’ll circle back to what needs to go into this document in a moment.)
Don’t overlook that first element. Talk to all project stakeholders within your organization to understand what the desired end state is, along with exactly what’s needed to get there.
Processing
During processing, the requestor sends the RFQ out to vendors and awaits their replies. In business procurement, the rule of thumb in terms of the number of bids is to wait for between three and eight responses.
This rule isn’t universal, though, and there’s certainly flexibility for agencies here, depending on the size of your agency and the scope of the RFQ.
Once your submission deadline passes, review the bids that have come in and communicate with the bidders, especially if you need additional information.
Awarding
Last up is the selection process itself, where you award the contract to one of the vendors that sent in a response to your RFQ. How you make this decision is up to you, but to reiterate the importance of balancing cost and quality, here’s a word from Warren Buffett: “Price is what you pay. Value is what you get.”
Key components you should include
To get the most out of the RFQ process, you need to send out RFQs that are clear, logical, and complete. When you do, you’ll spend less time and resources evaluating the responses and eliminate the back and forth with vendors trying to fill in missing details.
The right quoting software makes it much easier to keep all these components organized through the use of RFQ templates and digital forms. But whatever you use, be sure to include each of these key components in your formal document:
Company introduction
Include a short summary about your agency so that vendors understand who the RFQ is for. Don’t forget contact information here, in case potential suppliers print out your RFQ or otherwise detach it from whatever connects it to you.
Project background information
Here, you’re describing the nature of the project in high-level terms, almost like an executive summary. You’ll also want to include any context or background information vendors would need to understand what you’re looking for from them.
Scope of work
Your scope of work should outline the project requirements all the way from project start to the definition of done.
The background information section was the orienting information, telling vendors what the project is all about. The scope of work is where you provide the detailed information that tells vendors what exactly is — and isn’t — part of the project.
Evaluation criteria
Vendors are spending time and resources to customize their response to your RFQ. So be sure to give them the same courtesy. Tell them exactly what selection criteria you’re using to evaluate responses and how those criteria will affect your final decision.
This also helps you in two ways. First, it could scare off certain service providers who wouldn’t be a good fit anyway. Second, it helps you gather specific information that’s relevant to your actual needs so you can make a more informed decision.
Instructions for vendors
Your evaluation criteria should focus on who the vendors are and what kind of experience they have. Your vendor instructions are more practical, telling them exactly what information and content you need them to include.
Deadline
Another vitally important element: don’t forget to give them a deadline for responding. It’s also a good idea to include a deadline for project completion (so vendors can appropriately schedule and plan).
Terms and conditions
Are there any dealbreakers that would make the vendor underqualified to complete the work or have their contract canceled? If so, note them here. Better to scare off some bad-fit vendors than to burn time and money pursuing them.
Manage and write effective requests for quote (RFQs) with Teamwork.com
Whether you’re on the sending or receiving end of the RFQ process (or both), RFQs can be a meaningful part of winning bids and finding the right vendors for your agency.
But building a killer RFQ (or RFQ response) takes work. You’ll need to give attention to all the right details and make yourself as attractive and compelling a partner as possible.
Teamwork.com is the perfect place for building and managing your procurement documentation, including RFQs and RFQ responses. With a robust library of templates and powerful task management tools, Teamwork.com is the solution you need to excel.
See more of what Teamwork.com can do for your business now - get started now for free, view our comprehensive pricing plans, or book a demo today.
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