A request for quotation (RFQ) in construction presents vendors with the opportunity to bid for work. In this article, we’ll take a closer look at how RFQs work and how you can respond to them more effectively as part of a cohesive construction bidding strategy.
What is an RFQ in construction?
An RFQ in construction is a form of correspondence between project owners seeking pricing information from vendors capable of fulfilling their specific needs.
At this high level, an RFQ might seem similar to a request for proposal (RFP). However, these types of correspondences have different use cases. Companies issue RFQs when they know exactly what they want whereas RFPs allow for a greater level of input from vendors regarding specifications.
What does this look like in practice? Well, an RFQ might be used to gauge pricing on a specific amount of materials. An RFP, meanwhile, would be used to gauge pricing for large-scale services such as construction project management or general contracting.
Characteristics of an RFQ in construction
Next, let’s look at some characteristics of appropriately-used RFQs in construction.
Given that RFQs are primarily used when a project’s requirements are very clear, this type of correspondence logically includes very detailed lists of those needs.
Recall the aforementioned example of an RFQ issued to obtain pricing information regarding a set amount of material. In some cases, owners may provide a detailed breakdown of functional requirements and leave the material calculation up to vendors.
With either approach, RFQs provide a great deal of specificity.
Aimed at gauging more than just cost
While RFQs lend themselves well to situations in which senders are looking for the best possible price on a predetermined set of products or services, the cost is typically just one of several factors being evaluated.
A vendor’s capability to deliver the specific services required is also an important consideration. An RFQ’s sender gauges this based on each vendor’s response to questions concerning delivery dates, bulk order discounts, and the like.
It’s important to keep this in mind when responding to an RFQ. The lowest price may not necessarily get you the contract.
RFQ example in construction
Now, let’s look at an example of an RFQ in construction and how it might fit into a typical procurement process.
A developer is looking to build a residential skyscraper. They issue RFPs to a number of general contractors potentially capable of handling the project. The general contractors, in turn, issue RFPs to subcontractors that will handle distinct components of the project, such as:
Now, these subcontractors don’t make the materials they install. They buy them from vendors. This is where RFQs come into play.
Subcontractors don’t need much input from vendors providing materials because the project’s specifications have already been determined higher up in the chain. As such, an RFQ is the ideal means through which subcontractors can procure pricing information for materials related to the services they’re bringing to the project.
An electrical contractor, for example, might issue an RFQ for a specific type and length of cabling.
Now that you know what an RFQ in construction is and where it typically fits into the project management pipeline, let’s look at the essential components.
Keep in mind it’s not uncommon for an RFQ to fit neatly on a single page.
Project and contractor information
Construction RFQ templates typically include basic information about the project, such as its location. A letterhead providing information about the contractor sending the RFQ, including their contact information, is also typical.
Scope and requirements
Following information about the project and requester comes arguably the most important part of an RFQ: a breakdown of the exact needs that must be met.
As mentioned earlier, the specificity of this section is essential for receiving accurate pricing information. On the vendor side of things, understanding the specific requirements in this section is key for delivering an appropriate quote.
The scope and requirements section is typically arranged in a chart format with the following columns:
quantity of item needed
description of item
quote (the vendor will place their quote here)
Of course, a great quote means very little if the products or services being sought after aren’t available on time. This is why RFQs typically include information that would help vendors gauge deadlines, including for response to the request itself.
Beyond the benefits we’ve already mentioned, the inclusion of this information is a key part of vendor management since it can help those who lack the capacity to deliver what’s needed on-time self-disqualify.
Need to write an executive summary? Check out this guide for some tips.
Tips for managing the RFQ process successfully
No matter which side of the table you sit at, managing the RFQ process successfully is imperative. Here are some tips for doing so, whether you’re a vendor or a contractor seeking quotes.
Rely on resource management data when identifying quantities
Having to issue a new round of RFQs because your initial requirements were ill-defined can be a major inconvenience. Get things right the first time by letting resource management data influence initial calculations. Look through data from prior projects to determine ideal quantities.
Make sure you understand the requirements fully before responding to an RFQ
Savvy contractors read through the scope and requirements section of an RFQ very carefully before responding.
Remember, the services being sought after via an RFQ are very well-defined. Assuming the requester has done their homework, they know exactly what they need to ensure successful project completion.
This should make your job relatively straightforward – as long as you understand the requirements.
If you don’t, you’re better off asking questions than submitting an incorrect bid.
Keep response deadlines in mind
On the vendor side, you definitely don’t want to miss submission deadlines for an RFQ. Doing so raises questions regarding your ability to handle the project and deliver the necessary items on time.
On the requester side, keep in mind that selecting a winning offer may not be as quick a process as you might expect. Arrange your submission deadlines in such a way that you have breathing room.
When responding to an RFQ, build a case concerning your capability to handle the client’s needs
Just because a prospective client has issued an RFQ to you doesn’t mean they have full confidence in your ability to handle their needs. You’d still be wise to build a case.
Many vendors append information about themselves, including their volume capabilities, to the construction RFQ template upon responding. Some go a step further and include information regarding their approach to delivering the required materials (i.e. applicable warranties, return periods, etc).
We hope this guide has helped you understand the construction RFQ process and what goes into it.
In summary, RFQs are used by contractors seeking pricing information for very specific goods and services. This specificity is what differentiates RFQs from other types of requests, such as RFPs, which are typically used when pricing large-scale services such as general contracting.
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