rfi vs rfq

Project procurement management is concerned with sourcing material, consumables, and human resources for project execution. A result is a binding contract between two parties. 

Contracting processes start with bidding, and RFI and RFQ are bidding documents that allow organizations to interact with prospective sellers. 

RFI stands for Request for Information, and RFQ stands for Request for Quotation.  

This article will discuss the difference between these two contract documents, i.e., RFI vs. RFQ. 

RFI Vs. RFQ

We will start with the RFI.

RFI (Request for Information)

RFI helps buyers get information from the supplier regarding any service or product. This information allows buyers to proceed with either RFP or RFQ.

In simple terms, an RFI is sent to bidders to gather information before issuing RFP or RFQ.

An RFI is a non-binding document, and suppliers provide the information without obligation to the buyer.

For instance, if a buyer lacks the information needed to proceed with construction, they will raise an RFI expressing concerns and get helpful responses. Later, they can develop RFP or RFQ and float the tender.

Example of RFI

rfi

Guideline for Raising an RFI

  • Maintain a professional and considerate tone
  • Be specific
  • Provide sufficient context of the situation or question for clarity
  • Include attached images, videos, or documents as necessary
  • Use a consistent format type and document numbering
  • Suggest a solution or possible explanation for the question
  • Give adequate time for a response

The whole essence of RFI is information gathering and documentation.

While making a procurement decision, the performing organization may need the following information:

  • The current market conditions
  • Trends and factors driving change
  • Alternative pricing strategies
  • The breadth of product offerings by suppliers, etc.

The Benefits of RFI

The benefits of RFI are as follows:

  • Provide the required information to the seller
  • Requirements are vetted appropriately
  • Update the organizational data with the latest trend

RFQ (Request for Quotation)

Organizations use RFQ to reach vendors and get price quotes for the product or services they intend to buy.

You use Request for Quotation when the price is the main deciding factor, requirements are well-defined, and the proposed solution is easily available. It is best suited for standard products and services. 

The target is the price per item; the lowest bid gets the award. 

RFQ can sometimes be called an Invitation for Bid (IFB).

The supplier provides details of the item/services to be procured to the buyer.

Example of RFQ

rfq

The RFQ includes a statement of work to help the contractor to provide a price.

An example of a statement of work (SOW) included in the RFQ is below:

rfq statement of work

Guidelines for Raising an RFQ

Some guidelines for raising an RFQ are as follows:

  • A minimum number of quotes is required (e.g., a minimum of three bids)
  • The contractor must include tax and logistics in the quoted price.
  • A supplier must not submit more than one offer. Doing so will lead to disqualification.
  • No negotiation shall occur between a buyer and seller regarding quotations for fairness and transparency unless mentioned in the RFQ.
  • The qualified contractor or supplier with the lowest-priced bid will receive the award. procurement 

The Benefits of RFQ

The following are a few benefits of RFQ:

  • Get the lowest price for the required item.
  • Provide useful information for future planning
  • Ensure a fair and transparent process for bidders

Comparison Between RFI and RFQ

RFI and RFQ documents have some similarities, such as: 

  • They are both procurement documents
  • They originate from the buyers to the external vendors

However, they are different and serve different purposes. 

The below table shows a few differences between RFQ and RFI.

rfi and rfq comparision table

Frequently Asked Questions

#1. Does RFI or RFQ Come First?

RFI comes first. Based on RFI information, buyers prepare RFQ and float it in the open market.

#2. Is an RFI a Bid?

No, RFI is not a bid. It is a request to a seller to provide voluntary information to buyers and is not legally binding. 

#3. Is an RFQ a Bid?

Yes, RFQ is a bid.

#4. Who Prepares RFI and RFQ?

The buyer prepares both contract documents and sends them to the seller. 

Summary

Procurement involves buying from a third party, and the process should provide a choice of action. For example, the documents for correspondence could be RFI or RFQ. RFI is used for information gathering, but for buying a product or service, the RFQ is the right document. 

Reference

  1. https://en.wikipedia.org/wiki/Request_for_quotation#:~:text=A%20request%20for%20quotation%20(RfQ,than%20the%20price%20per%20item.
  2. https://www.bpp.gov.ng/wp-content/uploads/2019/01/Public-Procurement-Act-2007pdf.pdf
  3. https://www.negotiations.com/articles/procurement-terms/
  4. https://constructioncoverage.com/glossary/request-for-information
  5. Specialised Management Group PMP&CAPM Exam Preparation Course Material, Section 9, pg. 7, 18.
  6. PMBOK Guide, Project Management Institute, Seventh edition, pg. 74-75
Fahad Usmani, PMP

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.