What's the Difference: RFP, RFQ and Invite To Tender

In the world of contract management and procurement, there are a variety of ways the tendering stage will work. A key part of planning any piece of labor to be done, is determinative who is going to try and do that work; and setting out the terms of reference and analysis criteria for award the contract to the winning bidder.

Most owners or clients apprehend full well that they'll probably not get specifically what they need. Yet, they clearly still need the simplest way to see the most effective fit contractor or supplier to give them the most effective value for money. Of course, within the private sector, selecting a vendor doesn’t continually need a bidding method at all – and in several cases a sole-sourced vendor is chosen and a purchase order contract awarded directly. Typically this is often not the case in fact, then the owner/client needs some understanding of the categories of tendering contracts they need to settle on from when reaching to market to solicit a competitive bid. While every company (or government) has their own policies and contract rules around tendering bids, there are usually 3 ways of competitive bid solicitation to settle on from:

1. Invite to Tender
2. Request for Quotation
3. Request for Proposals

All 3 ways are identical from the legal purpose of view then are contractually binding in the same means. It goes while not saying so, that the terms, descriptions, power reserved, evaluation criteria, etc. started in any of the contract sorts is vital to confirm both a lawful and smooth relationship between client and vendors.

What we frequently get asked, is “What’s the distinction between the three?”

Invitations to Tender: These are usually utilized in major construction projects wherever the Owner is aware of in detail what they need. The invite to tender document contains elaborate specifications for the performance of the work as well as elaborate qualifications and necessities for the Bidders to fulfill.

Requests For Proposals (RFP): These are usually more openly written thus as to push the definition of work down to the vendor. RFPs are utilized in things wherever the client either can’t – or doesn’t wish to – outline the Scope of work up front to an adequate level of detail. Typically clients are faced with things wherever they apprehend what they need to achieve, however they don’t have the experience or time to work out a way to get there. They have to think about the experience and creative thinking of subcontractors to outline the most effective path to success.

Requests For Quote (RFQ): The RFQ is a ton just like the Tender, but usually smaller in size and scope. They’re typically a lot of geared towards clients who are seeking rating data for an outlined scope of work or offer of materials or instrumentation. Just like the Tender, the specifications, terms and expectations are well laid-out and therefore the vendor has fewer obligations for outlining the scope themselves.

From the feedback we have a tendency to hear, the client will use whatever name they need for the contract they use. So, in practice, you'll call it an RFQ once what you’re very creating is an RFP. The necessary factor to recollect is to be clear to the vendors what the expectations are; and for the client to make sure about the legally binding aspects of these contracts. Competitive bidding must be carefully planned and executed so on minimize any potential legal problems. Once you begin, it’s not easy to stop! Thus make sure you've got a decent set up in place on what you wish and what you don’t want. whatever procurement management software you employ, you ought to even be positive that there are smart controls and visibility into the tendering, bid analysis and award processes.