What is a request for quotation (RFQ)?

A request for quotation (RFQ) is a document that initiates competitive bidding for a particular project amongst prospective consultants / consulting firms. It is often the last step before selecting a consultant in the private sector, while it can be the first step in the public sector.

For many in the private sector, securing other information comes before learning about the costs of services. For instance, businesses want to know whether a particular consulting firm’s offerings, capabilities, talent and culture are suited to provide the type of services required. This is often done at the initial phase of contracting a consultant, through a request for information (RFI). A RFI invites all this information in a clear and concise manner.

Read also: What is a request for information (RFI)?

Once general alignment has been determined, businesses seek information on whether a consulting firm can meet the specific outcomes and deliverables for the project in question. This is done through a request for proposal (RFP), which invites a detailed strategy from the consulting firm on how it will go about achieving the outcomes, complete with timeframes and measurable output indicators.

Read also: What is a request for proposal (RFP)?

At the end of this process, a business ends up with a list of consultants / consulting firms that both align with business needs and have a comprehensive strategy to offer solutions. This is when cost considerations most often become the deciding factor, through a request for quotation (RFQ). A RFQ is a short document – often one or two pages – that solicits detailed information on cost structures and pricing for the services in question.

RFQs from prospective consultants / consulting firms allows businesses to consider the various cost levels in relation to all the previous information gathered about each firm, as well as against the budgeting restrictions of the business itself. The combined picture of costs and alignment can inform the selection of a consultant.

A RFQ is also known as a call for bids or tenders, an invitation for bids (IFB), or an invitation to tender (ITT). A good RFQ includes:

  • Invitation for detail, which includes a breakdown of each service and the corresponding pricing structure so as to provide a complete overview;
  • Detailed information on deliverables, giving consultants a clear idea of what is expected so that they can provide an accurate quote;
  • Cost considerations, so as not to cause consultants to expend themselves;
  • A reasonable deadline, which allows for careful consideration and accuracy. An RFQ usually comes with a deadline of two weeks or longer.

RFQ in the public sector

For public sector projects, a RFQ can also be called a request for tenders (RFT), although this comes with other regulatory boundaries. Public sector projects can have substantial monetary value, and government bodies often refrain from going through a prior shortlisting process so as to avoid the chance of bias or corruption. Also, many government institutions have regulated caps on fees or maximum budgets, meaning that pricing and thus a request for quotation is an important upfront step to filter parties that can deliver the services within the pre-defined price range.

As a result, an RFT is often the first step in the process of public sector projects, accompanied by a declaration that the selection process will be fair and objective.