Those who work in oil and gas are likely familiar with the concept of Request for Proposals (RFP), also referred to as Request for Quotes (RFQ). In fact, depending on where you work, you may have a set of standards to follow that each RFP must conform to, with rules for each vendor who submits a proposal or quote. And for other companies, each RFP may be different and customized depending on what you are seeking.
Over the years, the team at RedGuard has put together hundreds, possibly thousands of RFQs. In some of them, we win the business, and other times, there is a better fit elsewhere. It’s all up to the customer, their needs, expectations, and approach to the process.
We aren’t in the business of telling people how to write an RFP or RFQ for a blast-resistant building, but we are in the blast-resistant building business.
There are a few ideas we can offer that will help you get the best out of your request.
What's Your Intent?
Many companies start out the RFP process and already have a vendor in mind. They may have a rapport with a contact at one company and be eager to work with them again.
The problem with this approach is that it serves no one, except possibly the company making a profit on the project that you’re requesting. This is true for a number of reasons.
1. The Quality of Proposals May Not Reflect Your Standards
The first reason is that, often, if you’ve asked for proposals from a number of companies, but, in reality, already intend to use another, you may not get the same quality of proposal from the others. Maybe you had deeper and more meaningful conversations with your intended vendor, and they were able to extract a lot more about your intent from those conversations. The remaining companies, when making their proposals, are limited to the amount of information given to them in the RFP. That information in the RFP may hit the spot, but it also may be vague or buried in details and standards, some of which aren’t even relevant to the project.
When the quotes come in, you are essentially comparing apples to oranges because the vendors may not have understood the real scope of the project. And, it must be said – of course, apples and oranges CAN be compared, but they are different kinds of fruit. The same can be said about blast-resistant buildings.
2. Is the Product Being Commoditized?
It’s important to think about the product in terms of commoditization.
Without knowing it, you (or the vendors responding to the proposal) might be commoditizing the product.
If everything comes down to dollars and cents, it makes sense to choose the cheapest product, right?
That may be true of raw goods, but it is not true of blast-resistant buildings. There are many nuances that go into quoting a blast resistant building. Some of those are things like intended use of the building, proximity to the blast zone, the best materials for the building, the length of the project - there are many important details.
Think of it this way. You’ve had one or more meaningful conversations with one vendor, until you feel like they understand the scope of the project, and you’re excited to get the project started with them. There’s just one small problem. Your company has an RFP process to ensure that projects run the way they should - on time, on task, and on budget. That means that now it’s not time to start the project, it’s time to write the RFP.
Without realizing it, the RFP may be more generalized and could be rushed. One vendor will have the benefit of those important conversations, the others will have only the set of standards that gets included with the RFP, and all of those standards may or may not apply to the project at hand. (Sometimes there is an overwhelming amount of documentation included.)
In digging through the detailed standards, the project they propose may be more complex, and therefore more expensive than necessary. Or, on the other side of that coin, there may be details that were mentioned in conversations that were overlooked in the proposal.
Neither of these situations will serve you well. In the first scenario, every vendor quoting the project will likely be outbid because of the possibility of putting too much into the bid. In the second scenario, you may be surprised to get lower bids, from vendors who clearly just don’t “get you.” Or worse, you may be tempted to accept one of those lower bids and end up with a vendor whose outcome (and final price tag) ends up being much different than you had planned. "Cheap" can easily be the most expensive.
No one wins when the product is commoditized.
3. Are You Rushing the RFP?
The last reason that it's a bad idea to select a vendor for a project before the RFP process even starts is from the standpoint of time — both yours and theirs.
From the perspective of the companies bidding on the proposal, if you already have a vendor in mind, they are spending countless hours putting together a bid that they will never earn. And it won’t just be the one sales representative that this affects. It will be their estimators, engineers, and other subject matter experts that are consulted on the project. Imagine an RFP with a rushed deadline, perhaps a week. They may not be able to get every one of the people they need to be involved. This could be:
- Sales Rep (to get the RFP started)
- Logistics / Transportation
- Outside Suppliers (for specialized equipment)
- Procurement (to research supplies/equipment)
- Safety Manager (to help review/complete HSSE information)
- Legal (to review/red-line a contract)
If any one of the above is not available during the RFP process, it could upset the whole process.
From the perspective of you, the customer, that could mean a lot of time spent answering questions from vendors you have already decided not to work with. No one likes to put time into something they aren’t going to finish.
At some point, the other vendors will likely realize that the request is not a serious one. You may need a more serious bid from them at some point in the future, but with the memory of the previous experience at hand, will they spend valuable time on your bid the next time around?
For all of the reasons mentioned, it’s important to approach each bidding process with a proposal that includes all the important specs and conversations that clarify your details. A company with experience bidding on projects will seek the information that they need in order to provide an “apples to apples” proposal.
Using the Expertise of Vendors
Another consideration that can help you get the most out of your RFP process is to consider the expertise of the companies bidding. It will be important to pay attention to the questions that vendors ask you during the RFP process. They may be including information that seems outside of the scope of the project; sometimes this happens with regulations from the local authority having jurisdiction. In this scenario, it could be a sign that this vendor understands that there are standards that apply on a state level. If other vendors didn’t make accommodations for those regulations, it would be important to ask why.
Conversations around these regulations can ensure that details that will ultimately slow your project down are found early.
Oil and Gas Companies and Third-Parties in an RFP
It’s no secret that sometimes engineering firms or other third parties do work and manage projects on behalf of oil and gas companies. Sometimes an RFP for a blast-resistant building project may come from one of these third parties. If this is the case in the RFP, it’s important to be sure to get the ultimate “owner” of the project involved early. The third-party may bring their own set of requirements to the project. It’s important to have all the cards on the table.
Does Your RFP Process Allow For All the Answers You Need?
Many companies with an RFP process may also have a “portal” that all of the quotes are collected through. While this system is designed for a fair bidding process there are times when the system can impede the outcome.
An example might be a list of extensive open-ended or even vague questions with limited space for information to be provided. Or, a spreadsheet that requires a specific type of formulaic answer, but won’t accept the characters necessary to answer the question. Does your process have workaround for these situations or a point of contact to advise?
In the RFQ process, some companies provide for a RFI period, or “request for information.” This is a period of time when the vendors, having reviewed the RFQ are able ask questions about the project. If this is built into the process, it’s important that this time period allows for an appropriate amount of time to answer the questions and get responses out so the bidders can incorporate the information into the bid.
There could be numerous reasons this happens, but it’s often simply that there is only one point of contact answering questions of this nature. Be sure to allow time for inquiry and discussion.
Getting the Best Outcome
For the purpose of this article, we’ve used simple language and examples, but the reality is that blast-resistant building projects can be, and typically are, complicated.
RFQs are not a ratio of one building per one RFQ. It’s more often a complex of buildings, or a set of buildings. A vendor may quote all, or only some of them. The importance of taking time to investigate each building’s requirements is imperative. Quality vendors know the time necessary to plan ahead. The principle of equal value, or protection, in blast resistant buildings could be skewed if you aren’t getting the most out of the RFP process.
We’ve always encouraged our customers and potential customers to contact us at the earliest stage possible. This includes when turnarounds are approaching and a large number of leased buildings might need to be quoted, or when capital projects are planned that will involve a complex custom project. It’s not luck that at RedGuard we’ve got an amazing combination of business that includes the largest leasable fleet of blast-resistant buildings in North America, combined with some of the best custom capabilities to boot. We understand balance.
Contact us today for a consultation on your next project. We’d love to help you get the most our of your next RFQ.