Having all of the right information is vital to keeping the whole operation running smoothly. But knowing what information to ask for or to provide can be tricky.
Whether you’re a company looking for bids, of the bidder yourself, a request for information (RFI) is going to be a part of the process.
What Is An RFI?
An RFI is a business process used to gather information from a supplier. It helps companies to better understand the supplier’s capabilities.
Even though software these days has made finding procurements much easier, it hasn’t lessened the need for a solid RFI.
There are clearly defined sections to an RFI. These sections often contain a mix of both mandatory and non-mandatory questions. There will also be options for suppliers to attach relevant files as needed.
Some of this information is pretty general, such as:
- vendor financial status
- item or service categories
- distribution network
- technical capabilities
- quality controls
Other more specific requests could include:
- DUNS #
- payment means
- contact information
Suppliers provide the appropriate responses and then submit them to the organization. The buyer will then evaluate the RFI and select one of a number of available comparison reports.
An RFI is technically the first step in the vendor selection process. But it also serves as a qualification step prior to the Request for Proposal (RFP) or Request for Quote (RFQ).
What Happens with An RFP and RFQ?
The RFI is used at the planning stage of a construction project. If the information from the RFI is acceptable, the next step is typically the RFP or the RFQ.
We’ll take a look at the differences between these two requests.
More often than not, a Request for Proposal will follow an RFI. It asks the vendor to propose solutions to a company’s problems or business requirements.
An RFP will be more specific in terms of what the company needs. It outlines the business goals for the project and identifies the requirements that are necessary for the work being requested.
This document needs to have sufficient enough details to allow the vendor to understand exactly what the company needs. Without those details, the vendor cannot propose a valid solution.
At the same time, there should be enough “wiggle room” for the vendor to be creative.
Although it’s rare that a company will go from an RFI to a Request for Quote, it’s not unusual for an RFI to include elements of an RFQ.
The RFQ is even more detailed than the RFP. It gives exacting specifications required by the company for the project.
But unlike the RFP, an RFQ does not allow for the vendor to suggest creative solutions to the problem. It is far less flexible.
Typically, when a company puts out an RFQ, it isn’t looking for creativity. In this case, the company has predetermined and set specifications for a project.
The RFQ clearly details those requirements and then asks the vendor to assess the specifications. The vendor will then determine whether they can meet the requirement out of the box. If they cannot, they will specify what will be required to do so.
RFI-RFP vs. RFI-RFQ
As outlined above, the RFP and RFQ are follow-ups to an RFI. And if you’re a construction company looking to be innovative and continue to grow, it’s important to note that most vendors prefer the RFI-RFP route as opposed to the RFI- RFQ.
Companies coming to vendors with RFQs are viewed as more close-minded in their approach. Vendors find it difficult to work with a company unwilling to open itself up to the creativity and knowledge the vendor has to offer.
Of course, sometimes an RFQ is needed. And it’s the appropriate document for companies looking to add on to or augment an existing project.
But in new construction, most feel that an RFQ is not the best solution. After all, if you’re on the cusp of a new construction project, you’ll benefit from being flexible to what different vendors have to offer and suggest.
Otherwise, vendors will simply shoehorn their solutions to meet your specific needs and you’ll miss a key opportunity to allow your construction business to evolve.
In other words, many feel that the RFI-FRQ undercuts some of the positive changes your construction company could experience in favor of turning a blind eye to change.
And unwillingness to change is one of the most effective paths to a company’s obsolescence.
Best Practices for RFI
Depending on whether you’re requesting the information, or a company is requesting information from you, there are different processes in place.
To improve the whole process either way, you’ll need to take some things into consideration.
If You’re Administering the RFI…
When you put out an RFI, you’re signaling to potential bidders that they will be in competition with other vendors for your product or service.
But you also want to demonstrate to the vendor that you respect their time and resources by asking for only the most essential information needed to put the process in motion.
Therefore, to keep everything moving forward, you want to seek this information in a structured, formal and organized manner that will help you to easily make comparisons.
Here are several best practices to incorporate:
Be Specific about the Info You Need
You don’t want a bunch of irrelevant information.
But if your questions are too vague, that’s exactly what you’ll get. And then you’ll be stuck drowning in a flood of information trying to find what’s useful.
At this stage of the process, aim for service and resource capability information only. You’ll be able to get to the extraneous details about methodology later.
Ask for specific details concerning the vendor’s abilities to perform the job you need to be done. Will they be able to provide personnel, facilities, etc?
You may also want to request the following:
- financial statements
- company goals
- explanation of the vendor’s corporate culture
- quality assurance activities
- profiles of senior management
- projects under contract
Simply put, be clear, precise and specific as possible about the information you want the supplier to include.
Follow an Established Format
Just as asking too many vague questions is going to give you irrelevant information, not having an organized format is also going to cause you to waste precious time on trying to get the useful information.
Especially when it comes to comparing information from multiple bidders.
By gathering the information in a formal and structured manner instead, you’ll be able to make those direct comparisons of supply-side companies far more easily.
Creating connections and partnerships is key to the success of any business. And this is no less true with the construction business.
The main goal of the RFI is to establish a relationship with the vendor. And even though you’re doing the hiring, you’re still establishing a partnership.
As such, there should be mutual consideration right from the onset. Be considerate about the initial requests for time and resources.
And, most importantly, the entire process should be performed without prejudice for or against any individual supplier. Keep the competition fair.
Be Cost Conscious
There is a cost to the vendor in preparing responses to a construction RFI.
So the more you ask during the RFI process, the more cost you’re adding to their business. They’re going to later need to add that cost into their pricing models.
Also, don’t request pricing information just yet. The RFI is the introductory stage. You’ll have plenty of time to address that later.
Be Patient in Waiting for a Response
While preparing a response to an RFI typically takes less time than it does for an RFP or RFQ, you’ll still need to allow some time for the vendor to respond.
Generally speaking, you should expect a MINIMUM of a one week turnaround time. A more acceptable and standard time frame is two weeks.
Once again, this is another good argument for keeping the information you request down to the specifics. Because the more information you request, the longer the process will take.
If You’re Providing the Information…
What can you expect in an RFI?
Well, it’ll depend. The main factor in an RFI for construction has to do with the size of the job. The larger the project, the more variables, and unknowns there will be. And this is where an RFI can really help.
Here are some best practices for providing information:
Give a Timely Response
When you receive an RFI, it’s a chance for you to get in early on the bidding.
Therefore, you want to be able to respond with as little delay as possible. By being organized and clear about what you will and will not be able to provide, you’ll be able to process your response faster and with more precision.
Once you receive the RFI, ask yourself the following:
- Are you better than competitors for this particular job?
- Do you have the skills and resources to provide a viable solution?
- Can you – or do you even want to – win such a project?
Finally, check the customer’s track record for on-time payment. No sense in getting involved with a company that’s not on the up-and-up.
Ask Questions, As Needed
Ideally, the construction company has provided an RFI that’s clear and precise, as stated above.
If they haven’t, rather than spin your wheels trying to second guess what they want, ask for more clarification.
Remind them of the benefits of streamlining this process.
Know You Can Decline
Even once clarification is achieved, there’s always a chance that the RFI will indicate work you’d rather not perform. Or perhaps the work would lead to resource conflicts with other customer’s projects.
Not every job is going to be right.
Whatever the case, it’s okay to politely turn down work. Just be sure to do it in a timely manner so that you leave a good impression. This professionalism will increase your chances of a being contacted for other projects down the road.
RFI Once Construction Has Started
Sometimes more information is required once a project has been launched. This is to ensure that the work is done correctly.
There could be a need to start the RFI process for any of the following basic reasons:
There must be a complete understanding of the task at hand and the way in which a certain material is to be used, applied, shaped, etc. If this is not clear, then an RFI can resolve this.
Occasionally, a project specification may have to be modified. For example, if one building material needs to be substituted for another that is just not obtainable. An RFI should be opened in this situation.
When part of a project hasn’t been done according to the specifications, this is called a ‘Construction Deficiency.’ An RFI will help to clarify what needs to be corrected to resolve the issue.
An RFI process should definitely be open if there are good reasons to question a misapplication, omission, or just general lack of quality in materials or service.
Good forms and templates help you to include the right information in order to get sensible, useful answers to your RFI. You may want to record your newly opened RFI in a centralized software application used specifically for managing RFIs.
In any of the above cases, be sure go over the answers to the newly-opened RFI with a fine-toothed comb – ensuring that everything provided is clear, as well as realistic.
Once every answer you get back is specific and clear, only then should your mark that RFI as closed or resolved.
And continue to check your list for any unresolved RFIs. Resolve them as soon as possible to keep your projects/jobs on track.
Now Get Back to Work
If you’re looking to advance in the construction biz – either as a vendor or a construction company – it all starts with a well-thought-out Request for Information.
Once you’ve established that, the sky’s the limit.
And to really put that RFI to the test, contact us today! We’ll help you learn more about finding truly profitable projects.