08 Dec Procurement tip: The Pitfalls of Overprescribing your RFP
Today’s procurement tip is on the pitfalls that come with client’s that overprescribe their RFP (project requirement).
When most client run into a challenge problem, they have already spend time thinking, Googling, and researching all the possible solutions. When it comes time to procure that project, they have already determined what they believe is the best solution to their problem. Then, to ensure they get exactly what they want or more, the client will then create a laundry list of requirements and standards which outline their solution.
This process gives insight into two natural tendencies clients have when procuring services. The first is to believe they know exactly what they want [the solution] and the second is a fear of getting less than what they were expecting. Although natural, clients should resist these two tendencies as they will lead to overprescribing requirements and receiving subpar services in terms of high costs and low quality. Overprescribed RFPs do not give the client the advantages they hope for but only add risk to the project.
The Top Three Pitfalls of Overprescribed RFPs
The first pitfall is that the buyer is now put into the role of the expert. The buyer is now responsible for ensuring that their requirement is 100% accurate and complete in solving their problem and delivering high performance. Since the buyer is the one who created the requirement [solution], if any risk or problems occur, it will come at the financial cost of the buyer. Additionally, since the buyer is now acting as the expert, they are deterring true expert vendors from competing. The client’s actions reduce the value of the vendor’s expertise and motivate them to be reactive. Instead of the vendor proactively solving the client’s problem, the vendor is now reactively waiting to do only what the client has prescribed within the RFP. This becomes an issue as managing reactive vendors requires more resources. More importantly, the vendor is the most suited to be the expert; by putting the client in this role the results most likely will be subpar compared to an expert vendor’s solution.
The second pitfall may not be obvious, but by overprescribing RFPs, clients are giving nonexperts an advantage. When looking at the client’s problem, experts will already know how to solve it; they don’t need to be told what to do or how to do it. In contrast, nonexperts have no idea what they are doing. When the client gives the vendors the solution through a detailed list of specifications, deliverables, and requirements, the nonexperts can now appear “like experts” who know what to do. Since all the vendors have now been given a solution by the client [which may not be the most optimal solution], they superficially appear to be the same, with price as the only differentiator. The negative affects of this approach can be seen after the award as the client will then feel the pains of dealing with a nonexpert who truly doesn’t understand the requirement.
The third pitfall is that the buyer must now become a micro manager. When the buyer gives their requirement to the vendors, they in turn are setting a minimum standard of performance. However, in the vendor’s mind the client’s minimum is the vendor’s maximum, the highest possible value the client will get. Since the client has artificially made all the vendors appear the same, the lowest cost is key. As such, vendors’ sole objective becomes lowering their cost. Vendors intend to do the bare minimum to meet the client’s requirement in order to keep their costs low. The vendor’s only concern is to do exactly what was specified (possibly a little less but definitely nothing more). This problem is compounded if the vendor is a nonexpert who must be told what to do, which through overprescribed RFPs is highly likely due to the first two pitfalls. In the end, the buyer has burdened themselves with the role of micromanagement including inspecting all the vendor’s work, making all the decisions on the project, approving all actions, and enforcing and measuring noncompliance to the contract.
Two Big Tips in Writing Simpler RFPs
Writing an RFP and a project/service requirement does not have to be an intensive task, nor does it require technical expertise on the client’s side. There are two main components which are needed, (1) focus on identifying your problem and (2) identify key project metrics which give context to the problem.
As mentioned in the pitfalls, experts do not need to be told how to solve your problem. Instead of prescribing your solution, clearly explain your problem and let the experts tell you how to solve it. What experts need to help determine the best solution for you are the key project metrics which give context as to the limitations and conditions of the project. This could include:
- A budget
- Dates such as employee holidays or deadlines
- Size of the scope of services in terms of numbers of employees, transactions, or materials
- Unique conditions: company policies, mandatory preferences, or strategic goals
- Documents: drawings/designs, building layouts, previous contracts and service levels
For example, here are two requirement statements we have simplified in the past for clients:
- The City of Powell issues this RFP to request proposals for the janitorial services of 19 facilities, budget: $353,557. The cleanliness levels expected are Level 3 based on APPA standards for facilities. All facility information is provided including building size (sq ft) / cleaning area (sq ft), # of floors, restrooms, and special notes.
- Company A is procuring an ERP software program with the objective to replace the independent business operation’s current manual and semi-automated systems with a single system. The conditions of the ERP program must satisfy are: 10 sites, 3,500 regular staff, 20,000 transactions per month, 2 FTE for maintenance of system, $5.5 M budget, 2 legacy systems, and 8 major functions [payroll, timekeeping, etc.]
A Process to Simplify RFPs and Procure Experts
The Best Value Approach is a procurement and project management process that simplifies RFPs and utilizes expert vendors to solve the buyer’s problems. Through the BVA process RFP requirement statements can be reduced to two pages or less, be made within a week and require no internal client expertise in the service they are procuring.
To learn more about the Best Value Approach and creating simpler RFPs see:
- Free membership for latest tips and news: https://pbsrg.com/membership/
- For latest books, events, and licensed partners: https://pbsrg.com/resources/
- Latest BVA journal publications: www.cibw117.org/
- Annual Best Value Conference in January: https://bestvalueconference.ksm-inc.com/
- Latest presentations and videos: https://www.youtube.com/channel/UCxBi26nXLDTqG4ZRV6p0iiQ