How to create a Request For Proposal (RFP) and save time, cost and nerves?

What is RFP?

RFP is a free form document created by a company that requires to develop a product by external contractors.

RFP is used for soliciting proposals from potential suppliers about the evaluation of costs, timeline and other criteria for product implementation. This document is sent as a requirement to get a detailed business proposal from the participants.

Goals of RFP

It’s important to realize that both parties - customer and potential vendor are interested in the correct and detailed RFP.

• The more detailed and accurate request for proposal is, the more accurate budget estimation will be offered by the participants. Based on the agreed budget the contract will be signed.
• Depending on the additional requirements and expectations the timeline for project realization will vary. If there is a clear timeframe, then the accurate requirements need to be put in place.
• The detailed RFP will help to save the steady nerves of the decision-makers from the company side. This is especially when there are several participants and answering clarifying questions can take days or even weeks.
• Quality of the end product. Implementation of universal solutions or development of custom software, startup or analog products - everything influences the key indicators after the project launch.
• Awareness of RFP importance is the first step towards successful collaboration with contractors. However, the document filing plays a vital role.

Tips for compiling a correct and understandable RFP

• Cross-reference your expectations with your capabilities beforehand. If you run a startup for the local market, you should not require to develop a multilingual product.
• Before describing the product to potential vendors, think about whether you have a clear understanding of the future product? The variant “let’s start and then will see” does not work in this case.
• Specify the clear requirements: e.g. CRM system, on what users amount should it be focused. Not 100-1000 employees, but 100-120 instead, whereas, this already includes the prospect for team expansion. Be objective.
• Prepare yourself for receiving the business proposals. Even if RFP is prepared without mistakes and gaps, are you ready to consider the offers from participants upfront on delivery? Does the company have a dedicated project team, are the budget agreed and the business plan approved? If all organizational issues have not been discussed yet inside the company, an ideal vendor can refuse to cooperate halfway.

Agree with all the above-mentioned points and are ready to start? Let’s build an ideal RFP step by step together.

10 stages of RFP development:
from idea to ideal business proposal

1. Make an RFP title. Even being not official, however, this is a document that represents your company. It should include the following blocks:

• Name of the document;
• Name of future products;
• Name of the company that requests a proposal;
• The period of acceptance and consideration of the proposal.

2. Give a brief, but an inclusive summary of your company. This is a peculiar visit card, that allows you to represent yourself in the right way. Besides, this block will represent all the species of company business activity, which is essential while developing a software product for your target audience. The following points should be included in the company's summary:

• Company Name.
• A brief story about the company development.
• Company portfolio: area of business activity, current products, and services.
• Current market positions: price segment, portrait for the target audience, positioning, unique selling proposal.
• Goals and perspectives of growth: entering new markets, diversification of offer, increase in production output.

3. Provide a detailed description of the future software product from the marketing perspective. Each product is developed with a definite purpose, so you should fully describe the product goal. At this section the following aspects should be specified:

• Full and short name (if it already exists).
• The project value for the target audience (which problems it solves, what the client’s needs it covers, what the product’s usefulness is, what its unique feature is in comparison with the already existing solutions on the market).
• Monetization model (introduction benefits) of the project: getting 100 leads per month for ordering company’s products, selling of the particular product to 3000 clients per year, entering the market of another country (mainland, language audience) for 5 months.
• The current project status: is there a project legacy (platform, prototype, template, brand book, detailed website structure or UI/UX of application).
• Expected results: e.g. the sale conversion through the website should be 2,9% in the first year, in the second year the application should cover 23% target audience of competitors.

4. Technical project specification. This is the most important section, that influences 90% of the whole project cost. You should describe every detail as much as possible:

• Visual requirements for the product. UI for users website, product interface for company employees depending on responsibilities and access rights, color scheme, the presence of interactive elements, location and order of elements. Also, the usage of illustrations for example (screenshot of competitors’ services, photos from the internet with an example of pop-ups, etc.) would be useful in this section.
• Functional requirements for the product. Describe not only which buttons will be in your application or on a website, but which functions they will implement, how they will do that and in what order.
• Technical requirements for the product. Which technology stacks (e.g. for frontend and backend, which database or cloud) is optimal to use and which are unacceptable; what software or third-party libraries are allowed to use; which services or systems are needed to integrate; what access rights the users will have, which unique technologies should be used (e.g. technologies, with the help of which people with disabilities could use this software).
  
  Try to give examples to each section, where it already exists. This will significantly simplify the understanding with you and potential vendors.

5. How will you evaluate the project’s effectiveness? “Like” or “Dislike” is not a criterion. Moreover, you cannot include it in the contract. Specify the objective metrics for all the product’s elements. For instance, the website loading speed, positions in the search engine after realization, number of regular and new users of application per month, cost-saving in documentation workflow per month, etc. Also, you should describe beforehand the frequency (e.g. bi-weekly, each sprint, monthly, etc.) and form of interim reports by vendors, which means of communication (skype, slack, email, etc.) will be used.

6. Provide a rough budget estimate at once. The more precise it will be, the faster you will find a vendor. Also, you should indicate which amount exceeding the budget is not critical while considering a business proposal. This section should contain a detailed description of:

• Preferred pricing model (hourly rate per specialist, fixed project price, times and materials, etc.)
• Way of payment: prepayment, partial prepayment, payment for the interim result, post-payment.
• The budget boundaries. It is strongly recommended not to stretch the “from” and “up to” amount on more than 5% from the total project cost. Indicate whether you will consider business proposals if they exceed the budget limit.

7. Evaluate the preferable timeframes for project implementation. Specify whether you have a project roadmap that should be followed or strictly fixed the date of product release. Pay attention at the following points:

• Period of the contractor selection process. What are the start and end date you are willing to consider the vendors’ proposals? Indicate the dates as accurate as possible.
• Arrangement period for the details. How much time can you spend on preparatory works?
• Reference points of interim results. For instance, acquaintance with a designer, presentation of a general template, testing.
• The full completion of the general work scope. When the overall results and product testing for bugs and non-compliance can be made.
• Time for bugs fixing.
• The final release date.
• The period of technical support and maintenance, which is included in the general project budget.

8. Determine who is from your company responsible for which functions. It is important to specify:

• Product owner that will be responsible for making any disputed decisions.
• Project manager. It is a person responsible for communication between your company and all vendors from the contractor side.
• Technical coordinator - the specialist, who can explain contractors in accessible language the core of issues, bugs or development requirements within the product.
• Chief financial officer - an employee, who can take the financial decisions without delays within the project budget. Be advised, the payment delays will increase the product time to market.

9. Specify the clear criteria of candidates for the vendor role. Highlight the following key criteria:

• Company summary. Who, with what background, history and market position can submit business proposals.
• Company experience. How long the company is on the market, a number of released projects, which specialists should be in-house and what skills are must-have.
• Portfolio. Will you review the already existing projects and how? In which form the candidate’s portfolio should be presented to you?
• Cases with results. It is not the same as the portfolio. Here is important to know the numbers after project realization, which you at least would like to get for your company as a result.
• Peculiarities of cooperation: should the vendor’s representatives visit your office during the interview process, etc.
• If you have specific requirements to vendors (location, payment in a specific currency, the language of communication), describe everything in this section.

10. What are the requirements for submitting business proposals? Formalization, presentation. You should specify:

• Timeframes of business proposals acceptance.
• Are there any volume limits of the proposal (not less than 10 pages, not more than 50 pages, only with illustrations and prototypes, etc.).
• Referral contacts to request the project clarification (if you are ready to discuss nuances with each participant separately).
• Contact of responsible person for accepting proposals.
• Possibility of feedback (if you are ready to reply to all 5-10 and more companies, specify the terms when feedback can be given).

We would like to emphasize that RFP implementation is important primarily for your company. A well-described cooperation process and a model of the future product will prevent the situation when a vendor won’t be able to solve vital tasks and issues in the middle of project realization.

Have you already developed RFP following our guidelines? We will prepare a project proposal based on all the requirements of your company within 5 business days. Send it right now!