What is a Proposal?

A proposal is a document that explains to the customer the problem you’ve been asked to address and your solution. It is a critical sales tool, a board-level justification to spend money, and insurance.

Formally solicited proposals

A formally solicited proposal typically includes:

1. Requirements Matrix, which matches customer requirements with the paragraph and page numbers of where those requirements are addressed in the proposal
2. Executive Summary, which outlines the primary benefits of the vendor’s solutions to the customer’s requirements
3. Technical Volume, which demonstrates how each requirement will be met
4. Management Volume, which describes how the programme will be managed
5. Cost Volume, which provides all costing data, as well as implementation plans and schedules

Types of formal proposal

Request for Proposal (RFP)

RFPs provide detailed specifications of what the customer wants to buy and sometimes include directions for preparing the proposal, as well as evaluation criteria the customer will use to evaluate offers. Customers issue RFPs when their needs cannot be met with generally available products or services. RFIs are issued to qualify the vendors who are interested in providing service/products for specific requirements. Based on the response to RFI, detailed RFP is issued to qualified vendors who the organisation believes can provide desired services. Proposals in response to RFPs are seldom less than 10 pages and sometimes reach thousands of pages, without cost data.

Request for Quotation (RFQ)

Customers issue RFQs when they want to buy large amounts of a commodity and price is not the only issue, for example, when availability or delivery or service are considerations. RFQs can be very detailed, so proposals written to RFQs can be lengthy but are generally much shorter than an RFP proposal. RFQ proposals consist primarily of cost data, with brief narratives addressing customer issues, such as quality control.

Invitation for Bid (IFB)

Customers issue IFBs when they are buying some service, such as construction. The requirements are detailed, but the primary consideration is price. For example, a customer provides architectural blueprints for contractors to bid on. These proposals can be lengthy but most of the length comes from cost-estimating data and detailed schedules.

Request for Information (RFI)

Sometimes before a customer issues an RFP or RFQ or IFB, the customer will issue a Request for Information. The purpose of the RFI is to gain “marketing intelligence” about what products, services, and vendors are available. RFIs are used to shape final RFPs, RFQs, and IFBs, so potential vendors take great care in responding to these requests, hoping to shape the eventual formal solicitation toward their products or services.

Informally solicited proposals

An informally solicited proposal typically includes:

1. A description of the seller’s capabilities or products
2. A discussion of key issues
3. A description of the buyer’s specifications and how they will be met
4. The cost of the offering
5. A schedule for delivery of the products or services
6. Proof of prior experience, i.e. testimonials from previous customers and descriptions of previous projects

Why are proposals so important?

Proposals allow customers to compare different offers from suppliers in a consistent and fair way. In regulated markets, proposals help buying organisations manage risk by transferring it to a supplier as part of the service.

Proposals can also be a legally binding document that agree to services, at a certain price subject to certain service levels.

In some jurisdictions, such as the EU and specifically the public sector, procurement rules mean that purchases over a certain value must go through a formal tendering process.

Finally, a proposal is your opportunity to speak to the customer: it lets you show them you understand their business, differentiates you from the competition, shows that you understand the problem they are trying to solve, and that your solution will create value for them.

What are the steps to creating a great proposal?

• Customer focus: the customer doesn’t care about us, they care about what we can do for them
• Referencability: where have we done this before?
• Benefits not features: why is this useful to the customer?
• Relevance: why should the customer care about any of this?