Getting more than just a price! Because good RFPs give you the confidence and knowledge of knowing you will get a meaningful response(s) to your requests.
Here are four acronyms commonly used in the Construction
Industry when seeking costs, pricing or solutions and where they are commonly used:

BAFO - Best and Final
Offer – A request to one bidder/proposer or
short-listed group of bidders/proposers for their best price(s) for a specific
solicitation prior to determining a contract award.
RFI – Request for Information – This is usually used during the design or construction phase or
during the RFP negotiating phrase primarily for clarification purposes.
RFP – Request for
Proposal - A written request from the requestor (usually
the owner or a contractor) to a contractor, design professional or
subcontractor for an estimate or cost proposal. The RFP usually
contains a specific scope of work.
RFQ – Request for Price Quote - Also known as an Invitation
for Bid (IFB) is used for
soliciting price quotes and bids for the chance to fulfill certain tasks for
projects from selected suppliers and contractors.
RFPs 101
WHEN ARE RFPS USED?
- Where the request requires professional expertise or a building construction
specialty
- Where the product or service being requested is not currently
included or under a contract
- When one requires research, development or a solution to create
whatever is being requested.
WHAT DOES AN RFP DO?
- Informs potential
bidders of a procurement opportunity.
- Alerts bidders that
the selection process is competitive.
- Presents preliminary
requirements for the bid being requested
- Allows for an open (wide
distribution) or a closed (narrow) response
- Ensures that all bidders
respond factually to the identified requirements
- Infers impartiality -
that the bidding process is expected to follow a structured evaluation and
selection procedure, a crucial factor in public works projects
I
PROJECT LOCATION – This is a
description of where the project is located or the actual address.
PROJECT DOCUMENTS OR IMAGAGES – Any
applicable documents such as drawings and specifications that cannot be covered
in the Description of the Work and/or the Scope of Work.
PROPOSAL DELIVERY INSTRUCTIONS –
Where, who, where and how to respond to the RFP
TYPE OF PROPOSAL REQUESTED - Options include Lump Sum, Time and Material, Not to Exceed, and Other
Provide
unit percentage fees for; or Adding (MORE) labor and materials and deducting
(LESS) labor and materials
In the event
more or less labor or materials will be needed/not needed to complete your project it is good to know, in advance, how
much you will be charged for such changes.
Unit percentage
is the percentage rate the contractor will charge in addition to the actual
cost of the labor and materials on added or deducted items. For example: The unit
percentages have been established as 5% for more (additive) work and 2% for
less (deductive) work. You have decided to remove (deduct) the carpet from the
contract amount. The contractor will
prepare a change order request to deduct the cost of the carpet including
installation costs plus 2%. And if you
were adding the carpet to the contract the contractor would prepare a change
order proposal to add the cost of the carpet including installation costs plus
5%.
It is not
uncommon for deductive (LESS) unit percentages to be 0% because some
contractors feel that they have already spent time and energy on the item and
therefore do not want to return any part of their markup on deductive items.
ALTERNATE BIDS
OR ALLOWANCES - When budgets are tight it is not
uncommon to request alternate prices or allowances for components, materials
and/or equipment. And sometimes the
contractor will submit a bid with his own proposed Alternates or Allowances.
Alternates are useful when you need to compare
prices for certain items or if you want to see if specified items can be
substituted with an item of equal or better qualities for a lesser price.
Allowances are useful when the component or item
specified in unclear. In this case an
allowance (cost allowance) for the bid item will be included in the proposal
and ultimately the contract. When the
actual substantiated cost of the component or item is obtained the following
will occur: If the cost is less than the
allowance amount the owner would receive a credit for the difference;
but if the cost is more than the allowance the contractor would be paid the additional
amount.
DELIVERY AND/OR COMPLETION OF THE WORK
Starting Date/Time - This is your desired project starting
date and/or time
Completion Date/Time - This is your desired project completion
date and/or time; OR
Delivery Date/Starting
Time - This is
primarily for items being delivered to your project such as materials or equipment.
Include any lead
time items and time needed - It is not uncommon for contractors or
vendors to need time to receive items or equipment. Some items need to be fabricated, are back
ordered, or have shipping restrictions that take time. Therefore, it is important to know what items
require lead time and how much time because this information allows you to make
a decision on possibly substituting the item(s) with something else or simply deleting
it from the contract documents or scope of work.
Include the number of
calendar days to complete the work - Use
this section if the schedule is based on the number of days instead of an
actual completion date. “Calendar days”
are consecutive days whereas “days” alone can be construed as meaning only
“Working days.
BONDING AND INSURANCE REQUIREMENTS – If a bond is necessary for your
project select type of bond Bid Bond, Performance Bond, Payment Bond
Number of Parties to be named as
additional insured - This is the number of people and/or
entities you want named as additional insured’s on the certificates or
insurance for your project such as the construction lender, contractor, Home
owner Association, etc. Usually parties
involved in the project ask to be named as additional insured’s.
Tip!
Always demand certificates of insurance, with
your limits of insurance, from the
contractor before he/she starts the work and examine the coverage expiration
dates and being satisfied with the amount of coverage the policies offer; otherwise, you may incur considerable
liability.
Tip!
Limits of Insurance - These are the minimum insurance limits
that you require for your project. Your
insurance underwriter, most likely, would be pleased to provide you with these
limits. Generally, all construction contracts will have a section on insurance
stating the property owner’s and contractor’s insurance obligations under the
contract. The worksheets in this system only include contractor’s Insurance
requirements.
OTHER REQUIREMENTS:
Pre-Proposal Site
Inspection - This is
sometimes referred to as a “Pre-Bid Inspection” and as a rule, contractors
insist on inspecting a project before submitting a cost proposal or bid because
they want to familiarize themselves with the site to be satisfied that there
are no existing conditions contrary to the RFP requirements and/or bidding
documents. And most property owners
would insist on having such an inspection.
An example of a project not
necessarily requiring a site inspection would be an emergency repair such as
roof leaks or a faulty water heater repairs.
Inspection Date/Time - The is the date and time you want to
hold the site inspection
Special Instructions – These
are any special
instructions or requirements for the site inspection.
Special Conditions – These are terms and conditions, which may be unique
to small or home improvement projects. For larger and more complex projects Special Conditions are a part of the
Contract Documents and usually take precedence over the Uniform General
Conditions.
WHO TO SEND RFPS TO?
You can choose to
send RFPs to a single bidder, multiple short-listed selected bidders, or to the
public for anyone to bid. A Bid Opening can be open (where the bidders are permitted to
attend) or closed (where the bidders are not permitted to attend).
Depending on the scope
of the work it may be desirable to follow a detailed bidder screening process
to short list the bidders who should be invited for further rounds of
negotiation. Screening processes may include bidder scoring models or internal
discussions within the proposed bid
BIDDING 101
Here are the most common ways of bidding on projects:
WHEN ARE BIDS USED?
- Where the request requires professional expertise or a building construction
specialty
- Where the product or service being requested is not currently
included or under a contract
- When one requires research, development or a solution to create
whatever is being requested.

PROJECT LOCATION - This is a description of the where the project is located or the actual address.
PAYMENT AND TERMS:
Bid or Proposal Amount – The US Dollar amount proposed to
successfully complete the work in accordance with the contract documents.
Deposit Required - Deposits usually equal the shipping
costs of ordered items and do not include costs for labor and materials. Deposits should be reasonable.
Advance Required - Advance payment amounts for contracts
are generally regulated by local or state contracting agencies. You can obtain these allowed advance amounts
by contacting your respective local contractor’s licensing board.
Tip!
Don’t confuse an advance with a
deposit. Deposits are generally for
ordered items whereas an advance is an amount given to the contractor on the
total contract amount. Don’t advance more than what is allowed by the local
regulatory agencies which is usually a percentage of the contract amount.
COD
Payments Required - When
checked this means that COD payments are required.
FOB
Job Site - When checked
this means that the liability for the item(s) changes hands when they arrive
and are accepted at the Job site.
FOB
Installed - When
checked this means that the liability for the item(s) changes hands upon
completing and accepting the installation of the item.
FOB
Factory - When checked
this means that the liability for the item(s) changes hands upon leaving the
respective manufacturing facility.
For more or additional
work add cost plus (Percentage) - This
is the unit percentage rate the contractor will charge in addition to the
actual cost of the labor and materials on added (MORE) items.
For less or deductive work
deduct cost plus (Percentage) - This
is the unit percentage rate the contractor will charge in addition to the
actual cost of the labor and materials on deducted (LESS) items.
INCLUDED IN THE WORK:
Labor and Materials - This means that the cost of labor and
materials have been included in the total cost.
Labor Only - This means that only the cost for labor
has been included in the total cost.
Materials Only - This means that only the cost of the
materials have been included in the total cost
Supply and Install - This means that the cost to supply and
install the item(s) have been included in the total cost
Install Only - This means that the cost to install a
particular item(s) only have been included in the total cost
Supply Only - This means that only the cost to supply
the particular item(s) have been included in the total cost
DELIVERY AND COMPLETION:
Starting Date/Time - This is the project starting date and/or
time
Completion Date/Time - This is project completion date and/or
time
Delivery Date/Starting
Time - This is the
delivery and/or installation starting time for items such as materials or
equipment
Other - These are any other terms and conditions
that may apply to the agreement.
Work will be completed
within - Use this
section if the schedule is based on the number of days instead of an actual
completion date above. “Calendar days”
are consecutive days whereas “days” alone can be construed as meaning only
“working days”.
Lead Time
Needed - This is the
amount of lead time needed by the contractor or vendor for delivery of an
item(s) or to begin the project.
Tip!
Adjust your scheduled completion time
based on any lead-time requirements because
this makes your schedule realistic and avoids conflicts.
ALTERNATE COST
ALLOWANCES
QUALIFICATIONS OR EXCLUSIONS - Here is where you note anything to
qualify your proposal such as clarifications; or if you are excluding any thing
such as, but not necessarily limited to, items, components, activities, work,
etc. from your proposal. If you have any
doubts or performance concerns list them in this section. For Example: If the completion or delivery time of an item
compromises the requested completion time as set forth in the bidding documents
it may be necessary to qualify the proposal by saying “the completion time is
subject to receiving the (item) from the manufacturer by (Date)”.
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References:
W. Gary and Taemi
Westernoff (2011) Construction like Sushi
W. Gary Westernoff (1998)
Construction Management Made Easy
Constructionplace.com
Glossary
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