Brian handles request management development projects. He currently works for a team that develops and supports operations of the company for various projects in and out. His company is working on integrating the purchase process within their system. As discussed during the stakeholder’s meeting, in order to push into buying this software, some of them are advising him to initiate a Request for Proposal, while others are in the favor of a Request for Quote, and the rest are considering going straight to the contract negotiation.
The development team is hopeful that they can correct their internal dis-engagement and push the process forward. Brian’s company is divided on their decision to make or buy the software, in their meetings they have been discussing whether to design their own RFP Response software or buy a readymade software on the basis of major factors like the costing, production time, and alternative options.
The process is initiated by providing details about what is needed. Then, a request is sent to all prospective sellers. On the basis of all the responses received, the team picks a service provider and negotiates for a contract. Once the contract is signed and duly accepted, the product or service is then released to the buyer and the seller evaluates the results.
Request for Proposal vs Request for Quote
It is important to understand a team’s dilemma to choose which is more suitable, whether to send a Request for Proposal (RFP), which might involve potential products and services to be delivered as well as the pricing, or a Request for Quote (RFQ), which will provide pricing for a particular product or service. Initially, there are many similarities between various types of requests. However, there are certain differences that might help in determining what request type shall be used.
Here are some of the key factors that might determine which is the best RFP tool and shall be used;
The very first similarity between an RFP and an RFQ is that each of them can be used at the same step of the procurement process while picking the seller, and takes place only after the need is described properly. In addition to it, both the RFP and RFQ are involved in dual information exchange between a buyer, who provides details about the project and what is actually needed, and also the seller, who gives information regarding what all they can do. Finally, each point leads to negotiation for the contract with the chosen seller.
While there are many similar points between RFPs and the RFQs, there are a few key differences as well. In particular, they are different within their purpose, design, and certain points of evaluation. All such differences dictate when the other one shall be used and, for the team it also means the right type of request to be proposed to the client or the service provider.
The most crucial difference between RFP and the RFQ is the sole reason for which they are used or the processes which use them behind the scenes. An RFP is delivered, in a case where there is a common need that exists or in-fact a problem that needs resolution, and there are various prospective solutions. As and when an RFQ is used in the process, there arises a specific need with a pre-defined solution, as in a certain service is to be completed.
In order to make the entire process successful, stemming from the distinctive features in a purpose for all sorts of RFPs and RFQs there is a significant difference within their constituents. It is majorly due to an RFP, which is attempting to resolve all problems, it basically consists of a buyer who is defining the problem or a seller who is proposing their best solution and its cost. There has to be communication, un-interrupted as the two parties work to better understand each other.