Are RFPs bad for business? Part two

Communications and Marketing Associate

The Request for Proposal process (RFP) is like a buffet. You can’t help but want to try everything and anything, knowing full well that by doing so it will make you sick. Or in this case, broke.

As I wrote in Are RFPs Bad for Business? Part one, I find RFPs to be an exasperating and costly endeavour for firms. Beyond Referrals uses the real-life example of having 38 vendors each spending $20,000 to write a proposal, totalling an industry response cost of $760,000 just to bid on one RFP—for which the winner would receive $50,000 in fees. This means 15 times more money was spent by the industry writing proposals than the winner would get in fees.  That’s a huge amount of money and a huge drain on the economy when you consider how many “upside-down” RFPs are issued every year in Canada.

Furthermore, what makes this process even crueller—and is perhaps my biggest criticism directed towards the RFP process—is how much value some RFPs place on price in the evaluation criterion.

For example, in a score out of 100, an RFP will often value price at 50 points, which is half of the entire proposal! So, if you haven’t competitively priced your fee or if you haven’t received full marks on your qualifications, you’ve lost the proposal.

I find the entire grading systems to be counter-intuitive to celebrating and creating innovative design and moving towards building more resilient and sustainable infrastructure.

Luckily, many government and procurement entities are helping to rectify this aspect of the bidding and tendering process by implementing new practices such as Request for Qualifications (RFQ) and Qualification Based Selection (QBS).

RFQs separate qualifications and price by judging proposals first on qualifications and limiting submissions to a few top firms who achieved enough points to move forward. Price is finally entered into the equation at the end instead of being a determining factor from the beginning.

QBS excludes price as an evaluation criterion altogether when hiring a professional service firm for a project, improving the ethicality, transparency, sustainability and quality of a selection process. Already required by law when procuring architecture and engineering services for federal and state projects in the United States, QBS gives consultants the opportunity to prove why they are the best choice for a project, instead of bidding the lowest in order to win.

Yet, until RFQs and QBS are fully implemented in the bidding and tendering process, we must find or create our own RFP buffers to save money and better utilize our productivity and time.

From experience, I know that not all RFPs are created equally. Sometimes an RFP will ask for free work (which is never appropriate) and other times it will lack pertinent information such as the budget, a defined scope of work or even a defined list of services.

You can always email the project coordinator or the RFP contact, but it doesn’t mean that they can or will give you the answer(s) you’re looking for. So, what kind of system can you implement in your firm to make executive decisions on whether or not it’s logistically possible to pursue the RFP?

At Nadi, how we decide to pursue an RFP relies solely on the Go vs. No Go process, which was inspired by Beyond Referrals similar selection process, but with a few more tailored questions related to our firm. The Go vs. No Go is a sobering, but necessary set of questions to rationalize our desire to chase an RFP. Because as much as I complain about RFPs, I tend to get excited (and blinded) when I come across one that appeals to me or the firm’s goals—even if it’s impossible for us to win it.

The Go vs. No Go system separates emotions (like excitement) from the reality of submitting and winning the proposal. Questions such as: Is not responding a realistic option? Can we do the work? And, Do we want the work? Helps us review the RFP without becoming emotionally invested and caught up in the “what ifs” associated with it. It’s hard to blindly chase an RFP when the evidence shows that you won’t be competitive or successful.

Since we implemented this process, we have become more sophisticated in which RFPs we choose to pursue and how we approach them. We do research on the project and on our competitors, sizing ourselves up not only on qualifications but how pricing, like outsourcing sub-consultants, will look stacked up against firms or agencies that don’t have to account for extra fees. If you can’t be competitive, at least be smart, right?

Until the bidding and tendering process evolves, I highly recommend creating your own Go vs. No Go process to streamline how your firm or agency pursues RFPs. We waste millions of dollars pursuing RFPs that we won’t or can’t win. By understanding this process and implementing one of your own, you can work smarter, not harder—and become a more competitive buyer in the process.

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