We often get asked by property managers and service providers alike: what is the difference between an RFP and an RFI (or for that matter an RFQ)? Well, many in the real estate world use these terms synonymously as they may not understand the difference. And for the most part that is okay. But in order to ensure that you communicate clearly, let’s understand the differences between each of them.
According to the Purchasing & Procurement Center, “The choice of which document to use: RFI, RFP, RFQ for which type of sourcing project depends on the desired outcome – is it information, a firm proposal or a detailed price bid that is needed.”
That’s just it – each of these is designed to achieve a slightly different response from the vendors who are invited. So let’s look at the difference between an RFI, an RFQ, and an RFP.
RFI – Request for Information
An RFI is a formal method of gathering information about potential suppliers. It could be that there are many potential options from which to choose so the buyer would like to have a deeper understanding of the differences between the service providers. Ideally, using an RFI and the information received back from providers, a large list of service providers would be thinned down to a shorter one once the information is reviewed and analyzed against needs.
Thus, an RFI is often the first step in the procurement process and the information gained can lead to a successful RFP or RFI (however an RFI is not needed as many just go straight to an RFP or RFQ). Because it comes first, it is very important for the property manager to include the next steps of the process, and it can be helpful to include a timeline as well so that vendors can be prepared.
Also, since the property management company is looking to learn more about how the service providers work, it is best to ask open ended questions so that it is easy to determine how each company runs their business and services their clients.
RFQ – Request for Quote
An RFQ, short for Request for Quote or Request for Quotation, is a document to seek a quote, and not much more. This is rarely used in the real estate management industry, but in other industries where products are commoditized, meaning they are all basically the same. In these instances, purchasers know what they are getting, thus, they simply need a cost quote, and not much else.
RFP – Request for Proposal
A request for proposal (RFP) is a formal document which is designed to allow vendors to see the scope of a project needed, provide information about their services or products, and provide a cost quote for the project.
An RFP indicates that the purchaser is now ready to buy and seeking the right vendor for this property or project. Ideally, a provider will be selected once an RFP has been sent out and proposals have been received.
The RFP should have information about the history of the project, the scope of work, and any due dates associated with the project, among other things. Well structured RFPs can take some time to create, unless you are using a great RFP software like Synlio which will have pre-built RFP templates or customizable RFP templates for you to utilize quickly and easily.
The best real estate RFPs will have great proposal response rates because they are very clear and it is easy for service providers to understand. If you need assistance with creating an RFP, the RFP experts at Synlio can show you the best way.