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

Using an RFP versus a RFQ:

This is a good question and one we hear often. We will 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 can be an RFQ (request for quote), RFI (request for information), RFP (request for proposal), or ITQ (invitation to quote), IFB (invitation for bid) or others.

A RFQ is usually used when the Owner knows exactly the type and quantity of goods it wants to buy while RFP’s ask bidders to provide a solution to a problem that could be solved in different ways.

An example of when to use a Request for Quote (RFQ) would be if you are buying 100 each Toshiba Laptop Computers c/w 2 GB ram, 100 GB HD, DVD Burner, Windows 7. You know your exact requirement and have a specification to include or issue with the request.

An RFP might be used if you were unsure as to whether you want to purchase, lease, rent  those same 100 computers with varying specifications for software and hardware requirements that may differ from PC to PC. This gives the bidders an opportunity to offer a solution to your requirement.

With the above in mind, it should be noted that evaluating a RFQ is usually easier than trying to determine an award from the results of an RFP.

What is a RFQ (Request for Quotation)

by RFQ - Request for Quotation

RFQ-Request for Quotation:

RFQ is the acronym for 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 difference in terms can be confusing, an RFP and an RFQ are basically the same: an invitation for a potential supplier or vendor to submit a bid. Although the idea of an RFQ is fairly simple, it is still a business document, and as such is divided into several important 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 attempt to find one that is industry specific which will carry more pertinent terms and conditions relating to your field and to your needs.