In this three-part blog series, we review the steps needed to write and run an effective request for proposal (RFP) for a solar power installation. In part one, we define an RFP, roles, responsibilities, and how to gather requirements for the RFP. In future installments, we’ll examine how to create an RFP document, evaluate vendors, select a winner, and complete a contract.
What Is a Request for Proposal?
A request for proposal (RFP) is a document used by a business, non-profit, or government agency early in the procurement process to announce a project and its requirements to potential vendors. The document solicits proposals from the potential vendors through a bidding process.
RFPs are commonly used for projects that require technical expertise, specialized capability, or for products and services that do not yet exist. The RFP documents are a crucial part of the procurement process for an organization interested in purchasing a service or product.
Essentially, an RFP:
- Announces a product or service that a customer wants to procure.
- Provides requirements for the product or service.
- Confirms that the customer will use a competitive selection process.
- Ensures that vendors address the specified requirements.
- Follows a structured evaluation and selection process so that the customer can demonstrate impartiality.
The RFP Process
The purpose of the RFP is to provide business leaders with the information they need to make informed strategic decisions. The RFP process includes the steps listed below:
- Determine if an RFP is the correct procurement tool – There are solicitation alternatives to RFPs, including Invitations for Bid, Requests for Information, and Requests for Quotation, among others. It’s worth investigating these alternatives as they differ in terms of cost, complexity, requested products, services, or outcomes.
- Gather RFP requirements – The quality of an RFP and its outcome depend on the requirements. Meet with stakeholders to capture the business requirements considering purpose, goals, evaluation criteria, and nice-to-haves.
- Develop and administer the RFP – While every RFP has questions, to simplify evaluation, reduce the number of questions. Shorter RFPs attract vendors and simplify vendor selection.
- Conduct an initial evaluation of proposals – Conduct a preliminary evaluation to create a shortlist of qualified vendors by comparing critical factors against vendor strengths.
- Contact shortlisted vendors – Create a shortlist of vendors by asking them in-depth questions about critical factors, evaluating their bids using weighted scores, and requesting a presentation or demo.
- Select the winning bid – With input from business stakeholders, select the winning bid by comparing proposals with the evaluation criteria created in step 2. Weighted scores can help in this stage of the RFP process.
- Create and complete the contract – After selecting the winning vendor, create and sign the contract, which should include a statement of work with milestones, performance metrics, and a review process.
Best Practices for Solar RFPs
While solar projects can vary by size, location, equipment, and goals, there are five best practices to keep in mind for your RFP:
- Start with a clear goal to help develop the RFP and to evaluate the proposals.
- Focus on system performance outcomes rather than on specific technical or equipment requirements. This will give vendors the freedom to exercise creativity in their system design. Of course, the RFP should require that vendors select certified equipment.
- Simplify the evaluation process by specifying requirements you would like vendors to address like including a utility bill escalator in financial modeling, for example.
- Provide vendors with site information to help them address specific needs in their proposals.
- To attract the greatest number of vendors, disseminate your RFP as widely as possible.
RFP Roles and Responsibilities
Managing a successful RFP requires collaboration and coordination as a variety of stakeholders must identify a business need, gather information, and explore possible solutions.
By defining and documenting roles and responsibilities, your organization can run an effective RFP. Key players in the RFP process can include:
Business stakeholders include the team requesting the purchase or solution. Stakeholders may help determine what the solution should accomplish. They may also help evaluate and score the RFP responses.
The RFP manager is responsible for understanding the business’ needs and explaining those needs within the RFP. They are also responsible for assessing vendor qualifications, communicating with vendors during the RFP process, and selecting qualified vendors.
The Chief Financial Officer (CFO) evaluates costs and return on investment (ROI) to determine whether a solution is financially viable.
RFPs are an important part of the procurement process because they provide the due diligence businesses require to consider their needs and for vendors to design their solutions. In our future blogs, we’ll examine how to gather requirements, create an RFP document, evaluate vendors, select a winner, complete a contract, and more.
Developing and running an RFP can be complicated. We can help advise you on the process, from identifying goals to selecting the winning bid. To learn more, contact us for information.