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Sometimes, in the early planning stages of projects, you know what you need to accomplish, but you don’t have a preferred contractor to work with. When this happens, you will need a request for quotation (RFQ).
What is a request for quotation (RFQ)?
A request for quotation (or request for quote) requests potential contractors to submit a project bid that outlines how much it would cost if they took on your project. This happens early in the project planning process when companies determine who will do the work and how much it will cost. This information is important for your ).
RFQs are typically sent out when sourcing for a project. Using a template is a good idea for RFQs because it helps you gather the information that you need in one place, and prevents the chaos of organizing information in a spreadsheet.
4 main types of RFQ documents
The different kinds of RFQs are determined by factors like the industry that you’re working in, the kind of project, and whether you’re working with a government agency or a private business.
This first type of bid is the open bid where everyone can see what other businesses are bidding. This can help you make a more competitive bid by undercutting the competition. However, it also puts contractors in a position to think of value-adds that make a higher bid worthwhile.
A sealed bid is the opposite of an open bid. Here, the details and pricing are hidden.
With invited bids, only companies selected by you can submit. Invited bids can be both open or sealed.
With this approach, bidders are competing against each other by providing their lowest price and reducing the costs as the auction goes on. It’s basically the opposite of a standard auction, where the prices increase incrementally. With the reverse auction, you see how low companies are willing to go to get the job.
The reverse auction is common for open bid government contracts.
Why use a request for quotation template
Templates are an excellent tool for helping you put together strong, professional looking RFQs quickly. You get a boost from having all the information you need to gather laid out for you and, as we mentioned already, you’re not trying to organize everything in a spreadsheet (because no one wants to get a spreadsheet full of numbers they’re supposed to make sense of). Keeping this template in can help you have it ready when you need it.
RFQs are a good starting point for negotiations. They allow you to provide a baseline set of expectations for vendors. They define the required work and the expected or desired price point. As you get deeper into the procurement process, you can fine-tune your RFQ to better align with what you’re looking for.
Smart partner selection
RFQs help you choose the right vendor. The more specific you are in your request, the more vendors can provide you with the right information. It’s like the old story of Van Halen’s contract requiring all the brown M&Ms be removed. It wasn’t because they disliked brown M&Ms - they put that in their rider to see who was actually reading the RFQ.
A strong template avoids deviation from an RFQ process that works for you.
9 steps involved in creating and approving RFQs
So what is an optimal RFQ process?
1. Define your business needs
Start by defining what you’re doing and why you’re doing it. This helps contractors better understand the motivation behind your project and why you’re looking for a price quote.
2. Write detailed specifications and add relevant documents
Include all the specifications or requirements for the project. If you have a , include it and any other related documents (like or a list of deliverables).
3. Make a list of vendors to outreach
Having a gives you more control over the bids you receive. Be sure to capture contact information along with any pricing information you may have received in the past.
4. Send your RFQ document
Send the RFQ to those selected (or those who reach out).
5. Agree on the vendor selection criteria
While you’re waiting, determine the selection criteria. Take the time to decide what’s important before you start reviewing.
6. Compare different vendor bids
After the window for RFQs closes, it’s time to assess the bids. Having very specific selection criteria will help. Sometimes the difference between the vendor you choose and the one you don’t is very nominal.
7. Select the best vendor offer
Make your selection.
8. Draw up contracts
Send the selected vendor all the contracts they need to sign.
9. Send proposal rejection letters
Always take the time to thank each vendor that submits, whether you work with them or not. It shows vendors that you value their time and the energy, even if they weren’t successful.
👉 Get started with this RFQ template.
Start using this free RFQ template to help you and your team work with 3rd-party vendors and contractors.
How to write a request for quotation with Coda’s RFQ template
Step 1: Edit RFQ details to fit your company
On the page, customize the look and feel of the RFQ template. Include your company logo, set the cover image, and more. You can include other background or contract information on the RFQ template so that the vendor can best fill out the RFQ. You may even include a timeline of your project so the vendors know when they might hear a response.
Step 2: Send RFQ template
Create a new Coda doc for each vendor. Simply copy this doc → and share that copy with the vendor directly. Delete all other pages except for the page since that’s the main form you want the vendor to fill out. This may be easier for them to fill out compared to a Word or Excel file since everything’s online, and the vendor can share the doc within their team as well.
Step 3 (Optional): Compare bids
Manage your team’s entire RFQ process in a Coda doc. On the page, you can enter each bid as they come in into the table. This allows you to compare the quotes from each vendor. Make sure to create copies of the so that vendors cannot see the bids from other vendors. All the bid information should be internal to your team and company (unless you have an open bid RFQ process).
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