Our recent monthly Revenue-IQ article, Time to Change the RFP Game?, struck home with a number of service contractors and customers.
Both sides of service contracts recognized the Request for Proposal (RFP) process is broken. It brings pain, frustration, and lesser value – for customers and contractors.
Contractors definitely felt RFP pain. One contractor mentioned they’d just participated in an online auction and wouldn’t be repeating that train wreck again.
Another contractor noted the additional work customers would have to take on in a Scenario-based RFP and he wasn’t sure they would.
It’s clear a better RFP process is welcomed. The comments above (and more noodling) have prompted today’s post. Here are a few more points about Scenario-based RFPs to consider:
- RFIs (Request for Information) Are More Than An Exercise
- Evaluating Contractors’ Proposed Solutions
- Where’s Pricing in Scenario-based RFPs?
- Piloting a Scenario-based RFP
RFIs Are More Than An Exercise
The RFI becomes a required part of Scenario-based RFPs. RFIs weed out unqualified contractors, and end up with a short-list of approved ones. This makes it much easier for customers to select the best value from qualified contractors.
The effort customers will put into RFIs will be made up from easier and more effective Scenario-based RFPs.
Evaluating Contractors’ Proposed Solutions
RFP evaluations would change. The focus would shift to selecting the best value.
Customers wouldn’t have to determine if the contractors were qualified to deliver the solution. Only contractors who’ve been RFI approved are allowed to propose solutions.
Scenario-based RFPS would require customers’ business owners to:
#1 Determine the practicality of the proposed solutions.
#2 Judge how great an impact the solutions have on the customer’s business results.
#3 Assess contractors pricing relative to #1 & #2 above
#4 Select the contractor with the best value for the spend
Where’s Pricing in Scenario-based RFPs?
Pricing would only be calculated into the evaluation AFTER assessing contractors’ solutions. Pricing could follow the typical weighting and rating evaluation exercise.
Yes, it’s the real world, so pricing will likely have a higher weighting than other evaluation categories. But in the Scenario-based RFP, pricing is the LAST variable for consideration, not the first.
Imagine a customer’s decision makers sitting around the conference room table. They’re discussing the most compelling solution proposed. It’s obvious which one it is, they’re all in agreement.
And that contractor’s pricing is in the middle of the pack, say 3rd lowest out of 5 contractors.
Those customers would have to decide whether they
a) Select the most compelling solution as is – but get the most value, or
b) Negotiate with that contractor for lower pricing – possibly jeopardizing best value, or
c) Select a lower priced contractor
In any case, customers will be making decisions with their eyes wide open.
They’ll be able to clearly justify their decision. It’ll be based on expected contributions to business results. This justification, should it ever be needed, will be concrete if communicated higher up the food chain. This is rock solid CYA.
Piloting a Scenario-based RFP
As with any new initiative, it’s best to test it away from the spotlight. You’ll want elbow room to maneuver and course correct if needed.
An ideal customer candidate might be a small service contract. One with a progressive customer business owner and a handful of willing contractors.
The primary purpose of the pilot program is to learn how to make the process better. After completing the pilot Scenario-based RFP hold a formal post-mortem and figure out:
i) What worked?
ii) What didn’t work?
iii) What could be better next time?
Including the customer’s business owner, procurement and selected contractor will provide the insight to improve the next Scenario-based RFP.
That’s Not All
Obviously there’s more to be developed for Scenario-based RFPs before they’re viable. But in the absence of better RFP alternatives, it may be worth pursuing.
President, Service Performance
Technorati: best contractor value, RFI, RFP