CXO

Cheat sheet: What project managers need to know about RFIs and RFQs

Project management jargon can be trip up even the best PMs. Experts offer tips on how to create and answer requests for information (RFI) and requests for quotes (RFQ).

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Image: iStock/eternalcreative

Every day millions of companies send requests for information (RFIs), requests for quotes (RFQs), and requests for proposals (RFPs) to vendors around the world, but are these key components of successful project procurement providing the right information? Here's a cheat sheet to make crafting and responding to RFIs and RFQs much simpler.

SEE: Quick glossary: Project management (Tech Pro Research)

Defining RFIs, RFQs, and RFPs

Let's start with the basics and define RFI, RFQ, and RFP.

RFIs: In project procurement, the first step in requests is the RFI. Companies will typically send vendors an RFI to get more information about their services in relation to how those services can meet the company's needs. This is an initial exploratory step.

RFQs: Vendors are often sent RFQs to determine which of them will most effectively and accurately meet project goals and needs within a specified budget.

RFPs: If companies are unclear on how to resolve a particular issue, they may send multiple vendors an RFP seeking their solutions. This document is more formal and contains specific guidelines.

Since there's quite a bit of coverage about RFPs, the primary focus of this column is RFIs and RFQs. For more information on RFPs, start with Five tips to a better Request for Proposal, 10 things you should know about creating an effective RFP, and 7 Failures from Bad RFPs.

Best practices when crafting RFIs

When it comes to the RFI, Lewie Miller, President and CEO of Qvidian, a provider of cloud-based RFP and proposal automation software, says companies should "clearly define their requirements, any product/service specifications, or other qualifications that they will need to make an informed decision when selecting a vendor." He adds that companies should be able to clearly identify "what issues they're currently facing and what they're looking for in a resolution" to make it easier for vendors to "help resolve problems in a cost effective and efficient way."

Common mistakes companies make when sending RFIs to vendors

Eric Hobbs, CEO of Technology Associates, a managed IT services and support company, says, "Companies often make mistakes by applying this process to services which are infinitely more complex to compare vendor to vendor, and worse assume they know what feature is going to address their (often closely guarded) issue." They are often guilty of "assuming that the capabilities they are comparing from one vendor to another will actually have a positive impact in their business." He goes on to say vendors may "use a metric designed to treat the symptom versus addressing the true cause of the issue" and that "companies can do better by presenting their issues and asking more subjective questions aimed at the root cause."

Doug Ringer, President of Forest View Company, LLC, which helps organizations and individuals improve their business performance, notes: "The most significant mistakes I see in this phase deal mainly with communication. The company requesting information typically does not create detailed enough descriptions of what they are looking for and the responding vendors make too many assumptions." He says, "The initiating firm should schedule a meeting or meetings with the prospective vendors to review the request and begin an open dialog where the details can be revealed and understood."

Common mistakes vendors make when responding to RFIs

Miller believes that, "On the company side, not editing carefully to remove all potential distractions and mistakes are credibility killers. Although this may be a small issue, it can still hurt your chances of winning and diminish your brand. It is important to review RFIs/responses multiple times, checking for grammar, spelling, and other minor written mistakes."

Hobbs states, "Most vendors will happily respond to an RFI without first digging into the problem that the company is trying to address. Most companies make the mistake of assuming the questions they are asking will address their core issues and refusing to give their potential vendors the opportunity to propose their own unique solution." Here's how he would approach this situation: "Vendors should ALWAYS have substantive conversations with customers to uncover the real / root reason the RFI is going out in the first place and making darn certain that the questions that are being asked on the RFI will have the intended and correct impact on the customer's business while aligning with what makes that vendor special, ex: their unique approach."

SEE: Software Procurement Policy (Tech Pro Research)

Ringer says vendors tend to be more "focused on getting the business instead of focusing on getting the 'right' business." He believes that, "Sometimes two companies are not a good fit, and vendors must be willing to walk away if they think success is doubtful. This willingness to 'walk away' creates a peer-to-peer relationship between the two companies. This is when the best work can take place."

What are RFI deal breakers for both sides?

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Hobbs says, "For us, it is companies that won't share any additional information around why they are looking at alternatives. Often they like to play their cards close to their vest and refuse to answer any additional questions related to the need itself—it is akin to deciding what to eat by just looking at three nutrition labels. Companies that operate like this reveal a lot about how they make decisions (improperly) and is an instant deal breaker for us."

Miller believes that vendors must be sure they are up for the challenge. "If you are unable to offer, or you think that the company will not be satisfied with what you have to offer, then that should be the deal breaker for the vendor."

According to Ringer, "Costs that are much higher than the other vendors is an obvious one. The less obvious deal breakers are:

  • the inability for the two sides to work together,
  • schedules that do not meet expectations, and
  • the company expects the vendor to bear all of the risks."

SEE: Vendor Relationship Policy (Tech Pro Research)

Key information to include in an RFQ

Lawrence Kane, who is responsible for strategic sourcing functional excellence for Fortune 30 companies, says, "The use of an RFQ assumes that the business requires a commodity and all bidders can meet technical needs with acceptable quality, scalability, and T's & C's adherence. It is used to drive competition amongst pre-approved bidders (such as via a reverse auction)."

He also says, "Buyers need to have a quick answer, and price is the sole discriminator (or heavily outweighs all other criteria)." He added: "The RFQ must clearly state the product/service, acceptance criteria, pricing structure, and bid rules. Setting incorrect requirements will lead to expensive change orders/rework/extended schedule."

Vendors' mistakes with RFQs that may exclude them from selection

Michael Shearer, SelectHub's Director, Marketing Operations, says, "Software buyers are becoming more savvy and are developing more robust requirements that map to their RFQs, RFIs or RFPs." He added, "Vendors sometimes don't even get considered for an RFQ if they've failed to respond correctly to how they meet requirements (technical/functional/business, etc.). Missing responses from key requirements is a showstopper, and often vendors are unable to recover from these omissions."

Other RFQ-related vendor mistakes include "lack of compliance with bid rules, terms, SOW, or SLAs, missing deadlines, having higher than market pricing, etc.," says Kane.

Also see

About Moira Alexander

Moira Alexander is the author of "LEAD or LAG: Linking Strategic Project Management & Thought Leadership" and Founder & President of Lead-Her-Ship Group. She's also a project management and IT freelance columnist for various publications, and a contr...

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