Q: What’s the difference, to a vendor, between responding to a Request for Proposals and setting fire to thousand dollar bills?
A: Setting fire to thousand dollar bills is faster (saving precious billable hours), more fun, & leads to less disappointment.
When you issue a Request for Proposals, it’s to hire someone who can do what you want, when you want it — at the right price. You also want to level the playing field; simplifying comparisons and avoiding the appearance of bias. An RFP is also a challenge to vendors — prove you’re good enough; if you’re cheap enough, you might get the job.
In theory, you get competitive pricing from a variety of experts, and your decision is relatively straightforward; an apples-to-apples comparison. In practice, that rarely happens. Instead, an RFP almost guarantees you won’t get what you want (and seriously lowers the chance that you’ll get what you need).
At best, the damage RFPs inflict can be mitigated.
The Unhappy Meal
The RFP process is designed to eliminate subjective decision-making by reducing decisions into a series of ranked checkboxes, with rigid, inflexible criteria, scored in black-and-white. It’s how McDonald’s reduces the preparation of hamburgers into simple steps that an unskilled novice can manage.
Design services aren’t a commodity
RFPs work best when you’re purchasing a commodity, like staplers or hamburgers. The edge goes to the bidder who is most efficient at sales, shipping, or has the best volume discounts. The products are the same no matter who you buy from; only price varies from vendor to vendor.
Unlike making hamburgers, design and development are complex processes, and no RFP will enable honest, direct comparisons between vendors. It simply isn’t possible.
- The solutions you need are moving targets. You may hit the nail on the head when you decide what you need, but you may also specify unnecessary methods (with unintended side-effects).
- You may mistakenly think you can cut essential corners.
- A professional helps you to avoid these things; the lowest bidder, by contrast, needs to move onto the next customer in line behind you as quickly as possible.
If you’re expecting to enjoy the equivalent of a five-star meal at the end of a fast-food chain purchasing process, you’re going to be very unhappy.
How RFPs fail
- RPFs lead you to select a supplier for the wrong reasons: low-ball pricing (read inexperienced or desperate), or skill at responding to RFPs (telling you what you want to hear isn’t the same as delivering what you need.)
- RPFs result in wasting money on unnecessary or ill-advised tasks. When you’re diagnosing your own problems, the professional you hire is constrained, and can only take orders. This is precisely backwards. No professional wants their reputation tarnished by delivering an inappropriate solution that harms the client’s business, just because the client ordered it. The designer gets blamed when that happens.
- RPFs result in missed chances to save money — better, cheaper solutions can result in disqualification (for failing to match the stated requirements), or are impossible without deeper engagement than the process allows.
- RPFs scare off great candidates. Vendors know they can do everything right — even pointing out mistakes in supplied specifications — and still not win the work. Sometimes, a response to an RFP doesn’t even get acknowledged.
RFPs put the cart before the horse
The process puts you (the client) in the position of diagnosing the problem and those you hire get to take orders. If you have the skills to do the expert diagnosis, why would you go through the effort of issuing an RFP and sifting through responses? Why not just do the work yourself?
Even if done efficiently, solving the wrong (self-diagnosed) problems wastes time and money. The real problems remain.
The RFP’s dark secret — it is sometimes a charade
The best candidates will avoid RFPs like the plague because responding to RFPs is often futile. It doesn’t matter how good or competitive your response is. One candidate probably already had it all sewn up before the RFP was issued; you’re there as window-dressing, to make the decision look like the result of a fair process. (Call this sour grapes if you like; I’ve been doing this since 1994.)
Beating a preferred vendor means radically under-bidding a job. That isn’t the start of a healthy, productive, long-term relationship for anyone.
When might a call for proposals get a response?
- If I already have a relationship with the client. Hopefully they can be talked out of issuing an RFP.
- Sometimes, what a client calls for is so simple that putting together a response doesn’t take long.
- Maybe there’s a chance to have a meaningful conversation with the client to size up the potential for a healthy, productive relationship. This can happen, but it doesn’t happen very often. (Why not? See charade, above.)
How can you limit the damage an RFP causes?
- Cancel it. No, really.
- Sit down with the people you might like to work with. Talk with them.
- Don’t ask them to solve your problems for free; ask them what they’ve done for similar clients in similar situations, and how they came to those decisions.
- Learn how they work. Then decide.
If you have control over the purchasing process at your organization, by all means: institute policies designed to eliminate nepotism, cronyism, and patronage from the purchasing process. Do this by having faith in your employees; empower them to engage, discuss, and recommend.
If you are required by law to issue an RFP, but you’d like to mitigate the damage:
- Define the problem you need solved as clearly and completely as possible. Avoid the temptation to prescribe solutions.
- Specify the budget. Being cagey about money doesn’t get you the best price — it wastes everybody’s time on inappropriate solutions.
- Break your project into phases: diagnosis & prescription, then execution. This minimizes your risk in case the relationship doesn’t work out, and eliminates pre-engagement consulting (which can only be based on a partial understanding of your problems) which is what an RFP demands of vendors.
- Talk to people you trust and ask who they liked working with.
- Talk to potential suppliers. You’ll know who you want to work with and who you don’t based on their experience, demeanor, and approach.
- Call me: 1-506-364-9408.
This is not about avoiding competition, artificially inflating prices, or being hard to work with. Far from it. It’s about building relationships that work, where everyone gets to do their best work — something to be proud of that everyone can build on.
2014-04-01 update I really liked this observation today via Twitter:
…RFPs favour those with time on their hands (as no one is hiring them). —Rob Ashton (@Robert_Ashton)