What it means
A buyer writes an RFP when it knows the problem it wants solved but not the best way to solve it. Typical examples are choosing an external auditor, a payroll system, a bank or a marketing agency.
In each case the buyer wants to compare approaches and not just prices. A good RFP covers the background, the scope of work, the timetable, the information each bidder must supply and the criteria for scoring.
Setting out the scoring criteria in advance keeps the process fair and focuses suppliers on what matters. It also makes the final decision easier to defend if a losing bidder complains.
Suppliers respond with proposals that describe their method, team, references and fees. The buyer then scores each proposal against the stated criteria, often through a panel so one person's preferences do not decide the result.
Some buyers add a presentation stage for the shortlisted bidders. An RFP differs from related documents.
A request for information (RFI) gathers general market knowledge, while a request for quotation (RFQ) asks for prices on a clearly defined item and is mostly decided on cost. Running an RFP takes time, usually several weeks to several months, and it takes effort from both sides.
Buyers should reserve the process for purchases that justify the cost, and give every bidder the same information and the same deadline. Answers to one bidder's questions should be shared with all of them.
For finance teams, the RFP is also a control. It creates a documented record that the supplier was chosen on merit, which helps with audits, with governance rules and with explaining decisions to the board.
Keeping the scoring sheets for several years is good practice.
In practice
Real-world examples
Example 1
A growing logistics firm issues an RFP for a new accounting system. Five vendors respond, and a panel of finance, IT and operations staff scores each one against ten criteria. The top two vendors give live demonstrations before the final choice. Finance insists on seeing a demonstration with the company's own sample data.
Example 2
A university issues an RFP for an external auditor, asking about the team's experience, audit approach and fees. The audit committee interviews three firms. It chooses the one with the best score even though its fee is not the lowest.
Example 3
A city council issues an RFP to build a visitor app and publishes the scoring weights with the document. Bidders can see that quality counts for 60% of the score and price for 40%. The council later explains the result to the public by referring to the published scores. No bidder challenges the outcome.
Think of it
Imagine you want to build an extension on your house. Instead of hiring the first builder you meet, you write down your exact plans, materials needed, and budget, then give copies to three different builders so they can compete for the job with their best price.
Formula
Calculation
Weighted score = Sum of (Criterion weight x Score given)
Suppose a company scores two vendors out of 10 using weights of 40% for price, 35% for technical fit and 25% for support. Vendor A scores 8 on price, 9 on technical fit and 6 on support, so its total is (0.40 x 8) + (0.35 x 9) + (0.25 x 6) = 3.2 + 3.15 + 1.5 = 7.85. Vendor B scores 6, 8 and 9, so its total is (0.40 x 6) + (0.35 x 8) + (0.25 x 9) = 2.4 + 2.8 + 2.25 = 7.45. Vendor A wins by 0.4 points, mostly because of its stronger price and technical score.Case study
Seen in the real world
Brightwater Retail is an illustrative, fictional chain of 80 shops that needed a new point-of-sale system. The first draft of its RFP was three pages long and asked only for the lowest price per till.
The finance director rewrote it to describe how stores operate, how reports are needed and how the system must connect to the accounts. Seven vendors replied, and the panel scored them on fit, support, security and cost over five years.
The cheapest vendor ranked fourth once support and integration costs were counted. In this illustrative story, the chosen supplier cost $90,000 more up front but saved an estimated $220,000 over five years in reduced manual work. The finance director kept the scoring sheets as the evidence for the board.
Watch out
Common mistakes
- Writing a vague RFP, which produces proposals that cannot be compared and leaves room for disputes.
- Choosing on price alone, when the cheapest proposal may carry high running or integration costs.
- Changing the scoring criteria after proposals arrive, which undermines fairness and may expose the buyer to challenge.
Questions
People also ask
What is the difference between an RFP and an RFQ?
An RFP invites detailed proposals judged on quality as well as price, while an RFQ asks for prices on a precisely defined item.
How long should suppliers be given to respond?
Commonly two to six weeks, depending on how complex the request is. Complex projects may justify longer, particularly if bidders must visit sites.
Who should score the proposals?
A panel from several teams, such as finance, operations and the end users, so that no single person controls the outcome. Scorers should record their reasons so that the result can be explained later.