Definition of a Request for Proposal

A Request for Proposal is a document used in many different industries. It helps formalize the bidding and pricing processes so that prices can be easily evaluated and compared. The Request for Proposal form may be issued by a company, government agency or even a homeowner to help them secure pricing on a job.

Definition

A Request for Proposal (RFP) is a document issued to invite companies or suppliers to bid on a specific project. It is often called a Request for Quotation (RFQ) or an Invitation to Bid. These documents are sent by organizations looking to create a new project, often a building, or purchase supplies. By inviting multiple agencies to bid, the company is increasing its chances of getting a fair and accurate price. Typically, the lowest proposal or bid that is submitted will win the job.

Information on a Request for Proposal

An RFP may range from a single paragraph to hundreds of pages. The issuing body must include the item that is being priced, whether it is a new building, a road, supplies or some other product. They must also include specifications as to what kind of materials or services are required, as well as any requirements of those who are bidding. This may include manpower, company size or specific equipment. A Request for Proposal must also include how proposals should be submitted, and when they are due. Supplementary instructions may include construction drawings, material checklists or project schedules. All of these items allow bidders to submit an accurate price.

Clarifications and Changes

When bidders receive a Request for Proposal, they often have questions that require further information to be issued. These questions are submitted in a Request for Information (RFI) format. The purchasing company will review the RFIs on a project and issue Addendums or Change Bulletins to the Request for Proposal. These items are official records of change to an RFP, and are issued to all bidders, not just the bidder who submitted the applicable RFI.

Uses

Requests for Proposals are used by many different types of companies. They are a standard part of the commercial construction process, and are used by developers and municipalities to secure prices from local contracting companies. They may be used by businesses that need to make large purchases, especially wholesalers and distributors. Requests for Proposals are also very commonly used by the military. The military organization in need of pricing will issue an RFP to suppliers and bidders that are on a preapproved list. This allows the military to develop budgets and secure financing before the project is put out for an official bid.

Effective Proposals

Upon receiving a Request for Proposal, a supplier or contractor will put together their pricing. An effective proposal will contain much more than a price, however. To help the RFP-issuing entity compare prices, the company submitting a bid will include as much helpful information as possible to make their company stand out. This may include company history, credit references, special tools or equipment and their projected schedule for the work. They may also list a specific scope of work to show that they understand and have included all the required tasks in the RFP.