How Effective are your RFP’s and the three key indicators to measure to help you improve.
That is the question—and unfortunately, many professionals don’t have it on their radar. We often roll these documents out the door without realizing how ineffective they are, or how much time we may be wasting by not achieving the desired result.
Request for Proposals (RFP) have become the go-to purchasing or procurement tool. Their use is on the rise as more companies rely on them for virtually all procurement needs and project work-period. Whether an RFP is the right tool for the task at hand is another blog post altogether! In this post, we’re going to help you produce a more effective RFP by outlining three key indicators to measure when issuing one. Follow these steps and you’ll be far more likely to achieve the desired results while using the least amount of resources.
To get right to the point: you’ll save time, money, and energy by focusing on the content you include in your RFP. Strengthening—and selecting—the right content dramatically increases its potential for success.
What determines the correct content and effectiveness of the RFP are identified in these 3 key indicators below:
- Clarification Requests – If you are spending time responding to tons of the same questions asked by more than one of the bidders then the correct content or scope of work was unclear. So, the first key indicator which will help you determine how effective your RFP is would be the number and types of questions your supplier’s are asking during the response period. Could you have provided this information as part of the original Statement of Work or maybe some of the other deliverables were not detailed enough.
- Vendor Responses – The actual number of quality vendor responses received is the second key indicator. YES, responding to a RFP is expensive and vendors will put in the effort to provide a quality response if the deliverables are clear. A win for both parties.
- Competitive Quotations – The prices quoted by your vendors is the third and possibly the most important indicator and YES, this will be a factor. If your RFP content is clear, the quoted prices will reflect this. Removing unknowns will reduce project costs.
All the above are key indicators as to how effective your RFP is. If you are a seasoned professional, it is a known fact that a poorly written RFP and a weak Statement of Work (SOW) will yield both poor and more expensive results. We at RFQPro continually stress to our readers the importance of including enough information in your SOW to ensure your suppliers do not pad their quotations because they are uncertain as to the requested work they will be required to perform. When a supplier is unsure of what their duties will be, it is natural for them to build in additional funds to cover any unforeseen requirements or contingencies. This will result in the buyer paying more to complete the project and ultimately drive up the project budget.
To eliminate this from happening, work with your internal user group or consultant to develop a proper SOW and make sure all the commercial aspects are clearly articulated. If both of these areas are properly presented, you will be well on your way to improving the chances of receiving quality responses from all invited suppliers.
To recap, ask yourself these questions prior to releasing the RFP: Does your RFP contain sufficient information that will allow your vendor to create a solid proposal they could win based solely on the information in the RFP?
Insufficient detail is the primary reason why many projects fail or become delayed. It may lead to reduced competition (vendors simply don’t propose or submit), legal challenges, unfair competition (often one vendor knows the requirement), higher project costs or prices (from risk of the unknown), and exceptions and hedging will result from insufficient scope.
Let RFQPro help. Visit the list of forms we can supply to improve the effectiveness of your RFP’s.