Project procurement management is concerned with sourcing material, consumables, and human resources for project execution. An end result is a binding contract between two parties.
Contracting processes start with bidding, and RFI and RFQ are bidding documents that let performing organizations interact with prospective contractors.
In this article, we will discuss the difference between these two documents; i.e., RFI vs RFQ.
Let’s get started.
RFI Vs RFQ (Request for Information vs Request for Quotation)
We will start with the review of RFI.
RFI (Request for Information)
RFI is used to get information from the supplier or vendors regarding any service or product required by the buyer. This information helps buyers to proceed with either RFP (Request for Proposal) or RFQ.
In simple terms, an RFI is used as a request for clarification and sent to bidders to gather information before issuing RFP or RFQ.
An RFI is a non-binding document and suppliers provide the information with no obligation to the buyer.
In construction, for instance, if a buyer lacks the information needed to proceed, they will raise an RFI expressing such concerns and get helpful responses. Later, they can develop RFP or RFQ and float the tender.
Example of 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, video 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
- Breadth of product offerings by suppliers, etc.
RFQ (Request for Quotation)
Organizations use RFQ to reach vendors and get price quotes for the product or service they intend to buy.
Request for Quotation is used when the price is the main deciding factor, requirements are well defined and the proposed solution is easily available. It is best suited for products and services that are standardized.
The target is the price per item and the lowest bid gets the award.
RFQ can sometimes be referred to as Invitation for Bid (IFB).
The supplier provides details of the item/services to be procured to the buyer.
Example of 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 shown below:
Guidelines for Raising an RFQ
Generally, quotations are obtained from a minimum of 3 unrelated contractors. Some guidelines for raising an RFQ are as follows:
- The contractor shall be required to 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 take place between a buyer and seller regarding quotations for fairness and transparency unless mentioned in the RFQ.
- The procurement shall be awarded to the qualified contractor or supplier that gave the lowest-priced bid.
Comparison Between RFI and RFQ
RFI and RFQ documents have some similarities, such as:
- They are both procurement documents
- Most times they originate from the buyers to the external (vendors/contractors or the market)
- They both must be professionally written, as they can be referenced in the future.
However, they are entirely different and serve different purposes. Some differences between RFQ and RFI are given in the table below.
Procurement involves buying from a third party, hence there must be professionalism and a good choice of action. The documents for correspondence could be RFI or RFQ. RFI is used for information gathering, but for buying a product or service, an RFQ is the right document.
Are you involved with RFI and RFQ processes in your organization? If yes, please share your experience with them through the comments section.
- Specialised Management Group PMP&CAPM Exam Preparation Course Material, Section 9, pg. 7, 18.
- PMBOK Guide, Project Management Institute, Seventh edition, pg. 74-75