An essential component of managing a successful brand is choosing qualified contractors to assist your company in achieving its objectives. However, balancing numerous contract bids during a business quarter can be stressful and time-consuming.
This is where RFP (Request for Proposal) comes in. By leveraging an RFP, you can collect offers from numerous vendors and select the one that best meets your needs.
This article dwells on the basics of RFPs, their purpose, and how and when you should templatize them.
Let’s get started.
What is RFP in Contracting?
Typically, an organization looking for a vendor will create an RFP. It's possible that your business lacks the resources to complete all necessary tasks. Therefore, outsourcing tasks gives you time and resources while assisting you in achieving the quality you prefer.
In fact, you might think about drafting RFPs for anything that veers outside the purview of your internal expertise. To summarize, RFPs are:
- Worthwhile options for companies to share their needs and requirements of any upcoming project at large.
- Proven methods and an essential step in shortlisting vendors or service providers.
- Business documents that companies use to advertise and outline a task/project to solicit proposals from possible vendors.
Also, following the distribution of RFPs, you review the responses and choose the contract bid that performs better than the others or best matches your requirement.
Example: Say XYZ Corp wants to outsource a task of building a new website and is therefore looking for contracting partners. It plans to publish an RFP that covers project overview, goals, scope of work, selection criteria, and budget, along with documents on existing roadblocks and expected due/delivery dates.
As the next step, XYZ Corp receives responses from interested parties/vendors. The company can then compare the bidding information and finalize the contracting partner that fulfills their end-to-end requirements.
Why is an RFP beneficial to your organization?
RFPs are valuable as they help in getting good or sound proposals from various companies. Different suppliers share their contract bids to win a particular project. RFPs are drafted by those stakeholders who know the ins and outs of the project. A well-crafted RFP will help you eliminate a no-win contract negotiation against vendors.
Additionally, the process of drafting RFP, getting responses and selecting the contract bid, in itself is mutually beneficial. Firstly, potential bidders know the project descriptions and could decide on who to serve. Secondly, companies could utilize detailed action plans from vendors in addition to their contract bids.
In addition to yes or no questions, RFPs also include detailed queries. You could list existing roadblocks to success, budget constraints, and evaluation criteria. Many companies use the vendor responses and update their evaluation metrics subsequently.
Read Now: Why Your Procurement Team Will Find SpotDraft CLM Solution Useful
Writing RFPs to obtain competitive bids
A well-designed RFP will result in high-quality proposals or responses. It is therefore imperative to take care when drafting an RFP. Below is an example of an RFP's content:
1. Introduction and backstory
Spend some time outlining your business, the clients you service, and your market before delving deeply into the details. Bidders or possible partners will benefit greatly from a summary of your company, current issues, rivals, and business objectives when putting together responses to RFPs.
You can also talk about your company's goal statement, what it does, how long you've been in business, your founders, board of directors, executives, and anything else you feel is crucial for potential offerors to know about your brand or product up front in this part.
2. Project scope, goals, and budget
Define the project that needs to be finished, its parameters, and the associated costs. To decide whether to pursue the opportunity, bidders require comprehensive information about the project. Declare what you want to accomplish with this project and describe what you see as success.
Include a synopsis and a quick introduction of your project in this section as well. These facts can be used by contractors to create detailed action plans, timelines, background information, and cost data.
Being as specific as you can in this section of the RFPs will help you weed out vendors or contractors who fall short of the project's basic standards. Additionally, it will help qualified contractors produce a proposal that meets your goals.
3. Timelines and deliverables
The list of services for which contractors should submit bids, as well as their primary deliverables and deadlines, should all be specified in detail. They can use this information to review project mapping, gauge their bandwidth, and deploy resources appropriately.
Be open and honest about your deadlines. Inform prospective vendors of the deadlines for proposal submission, vendor selection, and the start and finish dates of the project. By using this structure, you show that you are proactive and prepared to attack this project head-on.
Contractors typically put a lot of consideration into their proposals. Let them know how and when you'll be in touch. Additionally, this makes it simpler for your business and the contractors to manage numerous bids concurrently.
4. Potential hindrances
If there is a pending issue, add it and ask the vendors for a solution. This activity will cut down on risk and get rid of any contractors who couldn't see how to fix your problem. Almost like a pilot project or beta test.
5. Include an RFP Cover letter
An RFP cover letter gives prospective service providers a polished impression of your business, much like a cover letter for a resume. It conveys the idea that they ought to take the proposal and the project seriously.
6. Concerns and Questions
Any questions or concerns you may have for your bidders should be put in writing. Include any additional information about your business that is pertinent to contractors but isn't covered in the aforementioned categories.
Responding tactfully to an RFP
Outstanding RFP responses can help small businesses land the next government project or win the contract bid. To know more about RFP responses that convert and work, click here.
Likewise, here are three things you should be doing before responding to the request for a proposal -
Schedule tasks according to your capacity.
In deciding whether to respond to a request for proposals, a company must carefully evaluate its operational capabilities.
Inspect the cost and price parameters.
If you are responding to a request for proposals, make sure both parties can agree on the financial component, as outlined in the RFP.
Examine the selection criteria.
In responding to RFPs, consider how your response will be evaluated. As well, check the RFP to see if there are any special conditions or demands.
“Our team wants to streamline and organize the contract review process so that the Spotdraft platform is a one-stop-shop for all things related to contracts. From contract drafting, review, collaboration internally, negotiation, and contract signature - we want to use Spotdraft for all these processes.”
Leslie Ann L, Counsel, Product and Commercial at Buoy Health.
Source: G2
When to automate the RFP process?
If you find the RFP process cumbersome and time-consuming, it's time to route it through an automation tool. Aggregating data and mind-numbing manual tasks are not the best use of your valuable time.
Check out the following signs to determine whether investing in a contract automation tool would streamline the RFP process.
- Lack of a repository for all RFPs: You are constantly in a haze of searching through scattered RFPs, lacking a centralized repository, or churning out low-quality documents.
- It's time to create RFP templates: You might want to make an RFP template since your team members use the same structure frequently. There is a good likelihood that your rivals are using contract automation solutions since they are increasing output and luring aggressive bids.
- Sailing through too many information barriers: Often crucial data is tied to specific stakeholders. Winning RFPs get drafted with inputs from various departments. If you find yourself fighting against gatekeepers, that's a valid signal that you should consider automating the RFP process.
The use of contract lifecycle management tools or contract automation software has become increasingly popular among companies with limited time and resources. In addition to creating and distributing RFPs, these tools can also be used to manage the results of those contract bids.
Sample RFP Template
Follow along with SpotDraft’s free RFP template.
Final Thoughts
Modern CLM tools like SpotDraft offer a wide range of automation, editing, and tracking features. They help improve the efficiency of sending RFPs and manage RFP responses and vendor proposals.
SpotDraft allows for templatizing RFPs and provides improved response rates and robust analytical insights. Try out a demo today.
