Construction RFP — The Ultimate Guide
Construction RFP is usually the weakest spot of construction companies in winning new opportunities to win business. The reason behind this is the failure of construction companies to show value in their request for proposals.
In this article, we will discuss what construction RFP is all about. We will also show you the other types of construction requests and the dos and don’ts for a successful RFP response.
Once you are done reading this article, you will have a deeper knowledge of construction RFP. Thus, allowing you to make great RFP and acquire new business opportunities.
ConstructionRFP: What is it?
A construction request for proposal (RFP) is a document that is used by organizations to get details for accomplishing their goals from potential suppliers and helps to source the best contractor to create the drawing boards.
A construction RFP is commonly the last part of the process when an organization is doing capital improvements.
Many public agencies or private companies are issuing requests for proposals in construction when they are trying to build or enhance a property.
In construction projects, the RFP is sent out to invite contractors to review project documents and submit bids. The request is usually sent out by the owner or general contractor which occurs during the solicitation phase.
The process of sending out construction RFPs is crucial for many companies as it determines whether or not the construction managers have the necessary experience, qualifications, creativity, and resources to finish the project.
Types of Construction Requests
1. Request for Proposal (RFP)
Just like what we said earlier, a construction request for proposal determines if the construction managers have the necessary requirements to create the project. Thus, it includes the project scope, background, deliverables, and other resources needed to accomplish the project.
2. Request for Information (RFI)
An RFI is a document used by many agencies and companies to collect information for capital improvements. Commonly, an organization is just starting to decide how it can build the project. Thus, it is looking for ideas.
For example, when general contractors are unsure about the specifications, they might submit a request for information to the client.
RFIs can occur at any stage in the construction project including the construction procurement to clarify the needed materials prior to the submission of the bids.
3. Request of Qualifications (RFQ)
The RFQ is a document that asks for information about the firm’s credentials, previous projects, and experience. Thus, RFQs help companies to narrow down the list of vendors whom they will want to send an invitation to bid.
Most of the time, construction projects require an RFQ or some kind of document to make the process of pre-screening and selection easier.
4. Invitation to Tender (ITT)
The invitation to tender is a document that is frequently confused with RFPs. Although both documents are used to invite participants in the bidding process, the ITT is usually utilized in situations where the scope of work is predetermined.
To simplify, the clients already know what they want and they are just simply looking for vendors to bid to complete the project.
5. Request for Quote (RFQ)
A request for quote (also known as RFQ but should not be confused with a request for qualifications) is a document commonly utilized in pricing equipment, materials, and some other resources.
This simply means that the product does not differ dramatically from vendor to vendor and is just a matter of arranging favorable terms.
TheDos and Don’ts of Construction RFPs
The Dos in Construction RFPs
1. Establish what you expect and describe your requirements
If the RFPs cannot describe clearly its requirements, it will take a lot more time for bidders to send their bids as they will need to request more information to know more about the project.
Additionally, it is crucial for companies to establish expectations with the bidders to avoid confusion. It should outline how bidders should make or structure their proposals in order to compare proposals easily.
2. State your cost qualifications clearly
When contractors prepare their response to the RFPs, it is important for them to clearly understand the cost qualifications.
This includes the number of meetings that will be held, the number of reports, review procedures, etc. By knowing the hard and soft costs, the projects of a company can avoid going over its budget.
3. Set a schedule
If your company will send an RFP to contractors, the RFP must clearly communicate the timing and when things should be done.
Once you have received the RFP, the contractor must also clearly state when you can expect the project to be established.
4. Be flexible
Being flexible during the RFP process will help you and the contractors to better assess the project. If both parties take a flexible approach, the project will likely reach a successful outcome.
The Don’ts in Construction RFPs
1. Making assumptions
In sending or receiving an RFP, you should not make any assumptions about the project or the parties that will be involved.
You should not assume unless it is clearly stated in the RFP. Assuming something that they do not mean can make the project unsuccessful.
2. Ignoring feedback
The RFP process is a tricky and tedious process, especially when parties do not listen to feedback from each other. By communicating with each other, the RFP process can be improved.
3. Setting unrealistic deadlines
Responses with the RFPs that you have sent out take time to allow the bidders to create quality proposals. Setting a realistic deadline will allow the company to evaluate and compare the responses effectively.
By focusing on flexibility and clarity, you are on the right track to making good collaborations with your bidders which allows the project to be successful.
Sustainability is a great concern in every industry nowadays. General contractors, developers, engineers, and architects, work together to construct buildings that offset or limit the negative impacts it may produce by using eco-friendly materials.
Additionally, as cloud-based software is growing in popularity, the heavy reliance of the construction industry on paper is likely to decline.
2. Labor shortage
Just like any industry, the construction industry is plagued by labor shortages. Thus, 2023 looks to be more of the same as 2022 concerning labor shortages. The labor shortages have been exacerbated due to the increase in construction spending and more projects. Additionally, not many individuals are fond of construction. Thus, construction employers will likely need to pay their workers more.
3. Infrastructure boom
Infrastructure construction is forecasted to outpace residential construction for the next 10 years. The industry will continue to draw many contractors’ attention and bids due to government support and spending on projects such as bridge, road, and highway constructions.
4. Digital Transformation
The pandemic has taught the construction industry that streamlining the collaboration and communication between parties on the project is crucial to its success. Thus, the best way to do this is to integrate construction management software.
Nowadays, more and more companies are adopting these software platforms that allow them to send, receive, and approve documents from anywhere in the world.
Additionally, the move toward Building Information Modeling (BIM) is just starting. Designers are using 3D modeling programs to create buildings which allows them to discuss with their clients and let them see their preferred designs virtually.
Many governments of various countries are creating laws that completely change the way how a company will produce or create its products or projects. Just like in California, using gasoline-powered small engines on power equipment has been banned which will take effect in 2024.
Thus, many businesses will need to change how they can power up their equipment to remain compliant with the law and to take into consideration its negative effects on the environment.
Construction RFP Components
Construction RFP has three main components which are the following:
1. General project information
The general project information is the basic information about the project. This section includes the following:
- What is the project all about
- When does it need to start
- When it should be completed
- What bottlenecks may arise once the project is started
2. Contract type
In this section, you outline what type of contract the client wants to enter into. You can ask them whether they want their contract to be fixed-price or cost-reimbursement contracts.
3. Requirements for submission
This section allows the client to know the information on how to respond to your RFP. The response might need to be:
- Submitted by a certain date
- A specific file type
- A specific number of pages
+ What is Construction RFP?
RFP is a document used by organizations to get details for accomplishing their goals by collaborating with their potential suppliers.
+ What is construction in procurement?
Construction procurement refers to sourcing labor and buying materials that are used in the construction of a project in a timely and efficient manner.
+ Why is construction RFP important?
The RFP is important as it determines whether your potential contractors are qualified to take on the project.
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