For solution-based requirements, you should use a request for proposal.
But if you need to buy commodities, consumables with well-defined specifications, an RFQ is the document you need.
Let’s dive in deeper.
RFQ Vs RFP
We will start this comparison with a review of RFQ.
RFQ (Request for Quotation)
An RFQ is used when the price is the deciding factor, and the proposed solution is readily available. It is best suited for products and services that are standardized and fully detailed.
The objective is to buy products or services quickly. Often, if the offer is technically sound, the contract is awarded to the lowest bidder.
An RFQ is sometimes referred to as an Invitation for Bid (IFB).
The buyer provides details or specifications for the item/services to guide the supplier in quoting a price.
Example of an RFQ
The statement of work can be as follows:
The contractor has to complete the table and submit it with the bid.
Here are some bid details:
- Payment Terms: Usually, payment will be made within 30 days of acceptance.
- Price Validity: The RFQ can clarify the submitted offer and the included price will be valid for 90 days.
- Currency: Quoted currency must be in USD.
- Submission of the Bid Document and Closing Date: You are required to submit your bid via email to [email protected] no later than April 10th, 2022, by 1:00 pm.
RFP (Request for Proposal)
An RFP is used when the buyer has a problem but lacks the skills and resources to solve it. They require a solution from vendors. Suppliers must offer creative and innovative solutions to win the award.
An RFP is common with consultancies, services, and complex projects. Normally, an expression of interest is published on the organization’s website or in a national newspaper to attract interested bidders. The buyers may select contractors (selective tendering) and invite them to submit a bid.
Content of an RFP
- Name and address of the buyers or procurement entity (PE).
- Preferred language of the proposal (English, Spanish, etc.).
- The manner, place, and deadline for bid submission.
- A statement that the buyer reserves the right to reject any proposal.
- Criteria and procedures for the evaluation of the qualifications of the consultants.
- Qualifications of consultants with documentary evidence—you don’t want to hand your procurement to an incompetent vendor.
- Nature of services including location and time when the services are to be provided.
- Preferred currency of the proposal (USD, Japanese Yen, etc.).
- Instructions that only one quote be submitted to avoid disqualification.
- Statement on whether the price consists of logistics, insurance, duties, and tax.
- The basis for selection of successful proposals—could be the least cost, quality, or a combination of both.
All offers are first technically then commercially evaluated. In most cases, the selection is based on the pricing. The bid with the lowest offer gets the award.
The bidder’s selection criteria may include:
- The number of years in the industries or financial stability
- Understanding of need
- Technical ability
- Project management skills
- Price or life cycle cost
- Quality of past performance
- Ability to complete work on time
An RFP lets the project management team the opportunity to acquire better products and services beyond the capabilities of internal resources.
So, the RFP provides an easy route to get the best solution.
An Example of RFP
An RFP is a multi-page document containing the details discussed above. Buyers can organize a bidders’ conference where sellers can ask questions and get answers.
Comparison Between RFQ and RFP
Most projects require procurement. An organization uses RFQs and RFPs depending on requirements and complexities. The objective is to create a complete bid document with the required information so bidders can quote correctly, and organizations get the solutions they need.
This is where this RFQ vs RFP comparison post ends.
Are you involved with the creation of RFPs and RFQs? If so, please share your experience with these procurement documents through the comments section.
- Specialized Management Group PMP CAPM Exam Preparation Course Material, Section 9, pg. 7, 18.
- PMBOK Guide, Project Management Institute, Seventh edition, pg. 74-75