When to Avoid RFPs

It was 1997, and we were planning the first remodel of our house. We invited Peter, a design-build contractor who came strongly recommended by a close friend, to come meet with us.?

We had a great conversation, at the conclusion of which Peter asked, “Are you planning to put the job out to bid?”?

He was asking, he said, because if we were, he wanted us to know that he would not be one of the bidders. As he explained, his work was not a commodity. In a project of this type, there will be issues that arise — having a trusting relationship between owner and builder will be critical in best addressing them.?

I have thought about Peter a lot since then (yes, we did end up hiring him!) and have adopted the same practice. I also do not respond to RFPs (Request For Proposal) — and for many of the same reasons.?

It Depends on the Situation

?On the surface, RFPs appear to be a smart and efficient way for nonprofits or government entities to procure goods or services. And often, that is indeed the case.?

After all, with an RFP, you put the requested work out into the world, find out who’s interested, and choose among those who step up and bid. The inherent standardization of responses allows for apples to apples comparisons.?

But, as Peter made clear to me more than 20 years ago, there are times when this approach is not a good fit and will not yield the results you are looking for.?

Specifically, avoid an RFP when…?

… you do not have a strong understanding of the process.

Peter asked how many large renovation projects we had managed. At that point, the answer was zero.

How then could we judge the bids received? How would we differentiate between a process that was well thought out and thorough, and one that was missing critical elements or illogical??

Further, by not knowing anything about the process, we would necessarily end up using price as our gauge, probably defaulting to one of the low-end bids. Peter assured us he would not be among them.?

… the project is difficult to define at the outset.

We have an older house. It’s not cookier-cutter and our requested remodel was custom to our wishes. Despite Peter’s years of experience (or maybe because of it), he knew there would be a fair amount of “on the fly” work and decisions to be made, many of which could not be identified before starting.?

In the consulting world, RFPs often ask for a clear definition of the planned process — this favors projects that can fit cleanly into a standardized approach. Again, sometimes that works just fine.?

But if the work is difficult to define (all of the work I do is like this), using an RFP to make a hiring decision will only serve to muddy the waters and likely cause you to overlook people and solutions that would be a better fit … not to mention the providers you miss because they decline the opportunity to bid for your work.?

… trust is fundamental.

A home remodel project takes over your life. There are trucks, and dust, and noise, and people you’ve never met walking in and out of your house for weeks or months at a time. When it’s finally over, you just want everyone to leave so life can get back to normal.?

We knew we needed someone we could trust to guide us along the way, which is why our friend’s strong recommendation of Peter was so important. Plus, given all the unknowns, we wanted someone who we felt would not take advantage of us as things unfolded.?

As you consider outsourcing work for a given project, think about how many things could go wrong and to what degree, the duration of the work, and the overall risk involved. The more of this that exists, the more who you hire matters, in addition to the work itself.?

… the outcome is unclear.

If my wife and I were in the business of flipping homes, we’d have a good sense of what the end result should look like on a given type of remodeling project. But we were completely in the dark.?

If we had attempted to write an RFP for this project, it’s likely we would not have asked all the important questions, since we weren’t entirely sure what “success” looked like. Peter recommended several adjustments to our initial plan once we were underway that resulted in a better use of the space.?

The same concept applies in business. For example, if you frequently host catered events in your office, an RFP may be perfectly fine as a way to differentiate among providers. You know what you want and can evaluate bids based on your experience and knowledge.?

But for other types of work — work that is new or that you do infrequently — you are better off not constraining things from the start with an RFP.?

Reflections

?So, assuming you’ve got a project for which an RFP does not seem like a good fit, what do you do??In my experience, as we did in hiring Peter all those years ago, the best place to start is with recommendations from colleagues, friends, or friends of friends who have been through the process before. From there, it’s up to you to do your due diligence in interviewing suppliers, partners and, of course, past clients of whomever you are considering.?

Yes, it’s more work than just choosing from a handful of bids within a uniform format. But if what you are about to embark on is important and the cost of having the work done badly is high — in terms of time, aggravation, and wasted resources — it is definitely worth it.

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