The Use of Quotations

by All TemplatesQuotation

Quotations are requested when the size of the requisition or proposed commitment exceeds a minimum dollar amount stipulated usually by policy in the organization of the bidder: for example, $500.00. This rule may not apply in Governmental purchases as they are required by law to perform and award a RFQ to the lowest responsible bidder. In some Industries, proposals may be requested with the intention of selecting a firm to negotiate or settle final prices with.

Depending on your organization, after a RFQ

When to use a RFP versus a RFQ

by QuotationQuotes GeneralRFP - Request for ProposalRFQ - Request for Quotation

This is a good question, and one we hear often. We’ll try our best to provide a simple answer to help you make an informed decision when performing your purchasing duties. This scenario surfaces when you are faced with generating a purchasing document to send to your suppliers.

Documents issued by the Purchasing group may include an RFQ (Request for Quote), RFI (Request for Information), RFP (request for proposal), ITQ (Invitation to Quote), IFB (Invitation for Bid), or other solicitation documents.

An RFQ (Request for Quote) is typically used when the Owner knows the exact type and quantity of goods required. In contrast, an RFP (Request for Proposal) asks bidders to propose a solution to a requirement that may be addressed in multiple ways.

For example, an RFQ would be appropriate if you are purchasing 100 Toshiba laptop computers with defined specifications, such as 2 GB RAM, 100 GB hard drive, DVD burner, and a specific version of Windows. In this case, the requirement is clearly defined, and vendors are quoting against a specific specification.

An RFP, however, may be used if you are uncertain whether to purchase, lease, or rent those same 100 computers, or if hardware and software requirements vary by user. In this situation, vendors are invited to propose a solution that best meets your operational needs.

With this distinction in mind, evaluating an RFQ is generally more straightforward, as responses can be compared primarily on price and compliance with specifications. Evaluating an RFP is more complex, as proposals must be assessed based on not simply cost but methodology, value, risk, and overall suitability.

What is a RFQ (Request for Quotation)

by RFQ - Request for Quotation

RFQ is the acronym for a Request For Quote or Request For Quotation. An RFQ is a request a company tenders when they have a material or service requirement; the RFQ is basically their way of encouraging Vendors to provide a bid for their requirement. The purpose is to provide a fair evaluation for all bidders and to provide the candidates with the evaluation criteria against which they will be judged. A secondary intention, is to encourage competition amongst the bidders which will help the buyer achieve the best possible bid and cost that suits their existing requirements. The company that issues an RFQ then selects one of the bidders to complete the material or service requirement. In today’s business world it is not always about the price, other factors such as quality and delivery often take precedence over cost. Another angle or use for a RFQ is when a business includes a RFQ form on their website. This allows potential customers to contact them to request prices on services or products. An online RFQ form may help to encourage viewers to make a purchase, as it solicits action instead of passive Internet browsing.

Another term frequently used is Request For Proposal, or RFP. Although the terminology can be confusing, an RFP and an RFQ both serve the same purpose: inviting potential suppliers or vendors to submit a bid. While an RFQ is a straightforward concept, it remains a formal business document and is therefore organized into several key sections:

  1. Section One of the RFQ is basically background information on you or the company issuing the RFQ.
  2. Section Two of the RFQ is often called “Required Deliverables.” This section describes the material requirement in detail, the scope or the desired end product if it is a service requirement. The RFQ should detail any special requirements the company is wanting.
  3. Section Three of the RFQ is the Assumptions and Agreements section. This section describes the terms and conditions of the tender, items such as a project budget, a bid limit, safety and regulatory requirements, what types of travel expenses or per diem the company will provide, the process used to approve the product or materials, and so on. By submitting a bid, the contractor is agreeing to abide by the terms and conditions of the tender. An RFQ also provides information for suppliers and vendors to use to submit their bid. This information may include a bid submission deadline, a bid form, bid requirements or information that the bid proposal must include to be considered, and the selection criteria or factors that will determine which bid the company chooses.

There are many free RFQ template examples available online. It is best to find one that is industry specific, as it will include more pertinent terms and conditions related to your field and to your needs.