Handling all business processes internally can be challenging for companies or organizations dealing with multiple clients or complex projects. These entities often outsource work to third parties when that work can be done better, more quickly, or for less money than the company could do it.
A request for proposal (RFP) enables a company or government agency to collect offers to complete specific jobs or projects from third-party vendors and service providers and vet them based on their ability to meet project requirements, budget constraints, and required skills. RFPs provide information on the company issuing the proposal and describe the process scope, evaluation criteria, bidding process, and contract terms.
Although any company can use RFPs, they are particularly suited to certain sectors, primarily the service sector. Construction companies frequently use RFPs, especially for large and complicated projects, in part to eliminate “scope creep,” which refers to adding new requirements or work not included in the original plans.
An RFP for construction typically outlines the scope of the work, key stakeholders, deliverables, expectations, budget, cost limitations, and realistic timelines. The contractor provides information on regulatory and compliance requirements, such as insurance, subcontractor details, equipment, and milestone estimates.
RFPs are also common among marketing companies. Marketing campaigns for large multinational companies tend to be complex and demand diverse skills, ranging from writing ads to data and research, video editing, and TV and Internet slotting. Companies operating across different regions also require customizing the core campaign to suit the target audience.
Unlike construction RFPs, which tend to precisely cover the scope of work, marketing RFPs offer more leeway on exercising creativity while adhering to the core marketing campaign. For example, a soft drink company can let the third-party tweak the advertising depending on the region’s culture.
Perhaps because of the broad scope of their work, the most common users of RFPs are government agencies. For example, the U.S. Department of Housing and Urban Development may have multiple projects and thin resources in different regions, and opt to outsource certain projects to private entities. Therefore, the government outsources projects and processes across consulting, construction, education, and other sectors to accomplish its work, ensuring adequate service provision to the public.
An RFP typically is a two-envelope procurement method. The first envelope contains the technical aspects of the proposal, highlighting how the third-party is to meet the requirements. It may include a portfolio of projects and details on the available resources. The second envelope contains the financial proposal. The agency only opens the financial bids to those entities that have met the minimum technical proposal requirements. This ensures that the qualifying criteria are based on the proposed solutions to the problem rather than the price.
After evaluating the financial proposal, an aggregate score drawn from the technical requirements and the bid determines the winning party for the contract. In closely contested cases, the organization may request that the parties submit their best and last offers for the contract. The runners up may also be allocated similar projects, though at different scales, in other regions with pending projects.
Since most RFPs involve government agencies and public institutions, a vetting process reduces the chance of favoritism or nepotism in lucrative contracts and helps projects attract capable and qualified candidates. The candidates, typically from the private sector, may introduce innovative solutions previously unavailable or beyond the agency's capabilities. Alberic Agodio is well versed at answering RFPs as it has been a key strategy to developing FIOA since he took over as the Managing Partner in Côte d'Ivoire.
