Request for Proposals (RFPs), Proposals, and Contracts in Project Management

Project management involves many practices for creating proposals and requirements. This chapter discusses how common procurement methods can result in project difficulties or even complete failure. It shows how inadequate Request for Proposals (RFPs) and Statements of Work (SOWs) make it difficult to employ modern iterative development methodologies such as the RUP.

Request for proposal template in project managementI decided this chapter would be beneficial based on my experiences as a consultant and project manager on numerous projects that implemented the RUP. My experiences prior to that as a developer on various outsourced projects also contributed to the need for this chapter. I strongly encourage developers to understand the proposal process, because this is where many decisions are made that shape the experience on the project.

Having served as a consultant to various outsourced projects involving the RUP, I have spent much time listening to clients, trying to understand their difficulties with software development. As I have praised the virtues of modern development processes such as the RUP with these clients, I have often heard a response that disturbs me. A typical response is, “I hear what you’re saying, but our Statement of Work/contract/agreement doesn’t let us do it that way.” In some cases, it is easy to work around these issues. In others, the situation becomes complex. Then, the focus turns to how to use a modern iterative development process while still conforming to the letter of the contractual agreement.

This is when problems arise. Even under the best of circumstances, software development is a difficult task. For many years, the industry has focused on methodology, techniques, languages, and process. We have come a long way. But there is room for improvement—especially in the areas of procurement and monitoring methods on large outsourced projects.

To see why, let’s look at how software systems are procured.How Is Procurement Accomplished for Outsourced Systems?At a high level, the procurement process is straightforward. Most procurements, particularly government procurements, follow these steps:

1. A Request for Proposal in project management (RFP, sometimes also called a Request for Solution [RFS]) is released to potential bidders.

2. On occasion, proposal meetings or conferences are held, often at the client’s location. Bidders attend to get an overview of the RFP, ask questions, and “scope out” the competition by observing who else is in attendance.

3. Each bidder typically forms a proposal team to examine and prepare responses to the RFP.

4. If the bidders have questions about the RFP, they submit them to the client. Whether oral or written, copies of the questions, together with the answers, are circulated to all bidders to ensure a level playing field. Depending on the complexity of the RFP, more than one iteration of questions and answers may occur.

5. For larger projects, the bidders give oral presentations to the client.

6. The written proposals are submitted.

7. The client submits questions to the bidders (if there are any). These are strictly confidential between the client and each bidder.

8. The bidders submit their answers to the questions.

9. The client requests a Best and Final Offer (BAFO), which the bidder submits.

10. The client makes a decision and notifies all the bidders.This process has several variations. If there are many bidders, the selection process may occur in phases. This is known as a “down select” or prequalification process, in which the pool of bidders is narrowed down to a select few. There are other examples, but they do not directly affect this discussion. Read What is Project Management and Who is the project manager to understand more about these practices and roles.

The Ten Steps in the Procurement ProcessLet’s take a closer look at each of the ten steps just described.

An RFP Is Released

Most contractors have marketing departments and track key developments with their customers. This means, in many cases, that contractors are aware that an RFP will be forthcoming, although they are unaware of its specific contents.

When the RFP is obtained, the contractor decides whether to respond to it. (This decision often already has been made by the time the RFP becomes available.) The contractor then forms a proposal team and examines the RFP in detail. In most cases, the written response has a specific page limit, and if oral presentations occur, a time limit is given for them.

The information supplied in an RFP varies widely. Most commonly, high-level descriptions of the tasks to be performed are given. A vision statement may be included, explaining why the customer needs the system and why any current systems in place are inadequate to solve the problem at hand. An SOW may be given, which directly describes the tasks the contractor is to perform. On occasion, if any prior analysis work has been done, the high-level requirements are provided. Sometimes, a glossary is provided that explains the key terms in the problem domain. AgileProgramming website published a very nice article about project management as well.

Proposal Meetings and Conferences

If you are considering responding to an RFP, these meetings are “must-attend” events. In addition to meeting the customer (and possibly some of the key project stakeholders), you can observe who will be competing with you on the bid.

You’ll also see how much interest there is in the proposal, judging from the number of attendees. The client typically gives a presentation summarizing the contents of the RFP, and perhaps some background on the client’s business and organization. This is usually followed by a question-and-answer session.

Step 3: Forming a Proposal TeamThe criterion for choosing the members of the proposal team varies from company to company. Large companies often have dedicated proposal teams and marketing departments. Small companies may have to pull people from billable projects to respond to an RFP. The bidder may have someone familiar with the specific problem domain or customer. More details about project management practices read on Brighton.

Also, anyone with certain skills that are deemed critical for a given proposal will be asked to participate to some degree on the proposal team.A quick schedule is drawn up, and tasks are assigned to each member of the proposal team. This is important, because with most proposal efforts, time is of the essence. It is common for the proposal team to work late into the night on proposals. All-nighters are not unheard of as the proposal due date approaches.

Questions from the Bidders

The bidder, while preparing a proposal, may have questions about certain aspects of the RFP. In most cases, questions cannot be asked directly of the project stakeholders. They must be submitted in writing through the contracts office. The contracts office then obtains the answers to the questions from the project stakeholders.

This controls the flow of information between the prospective bidder and the project stakeholders. If bidders were permitted to speak to stakeholders directly, one prospective bidder might obtain information the other bidders might not have. This opens the door to potential “award protest” litigation as other bidders may claim the information gave the winner an unfair advantage.

The questions collected from the bidders are then consolidated, along with the answers, and are distributed to all the bidders. When these questions and answers are provided, the identity of the contractor asking the question is omitted. (But in some cases, it’s possible to guess who asked the question if the pool of bidders is small.) This ensures that all bidders receive the same information from the client to prepare their bids, thus guaranteeing fairness in the process.

Oral Presentations.

Oral presentations are common, especially on medium to large procurements. Oral presentations generally occur after a down select process. The contractors remaining after the down select have their own private presentation session with the project stakeholders. Other bidders cannot be present. The contractor generally has a fixed amount of time in which to give an overview of its corporate capabilities, its assessment of the RFP, how it will respond to the RFP, and the proposed costs. An overview of the skills of key personnel is given. A question-and-answer session usually follows, and the presentation is concluded. Most oral presentations are one to two hours long.

Written Proposal Submitted.

The written proposal is submitted at the conclusion of the oral presentations or shortly thereafter. A strict page limit is usually imposed on the proposal (because on large procurements, the outsourcing organization may have many proposals to read and evaluate). At this point, the majority of the work by the bidder for the proposal is completed, and the bidder waits to hear from the outsourcing organization.Step 7: Questions and AnswersWhen a bidder receives questions from the outsourcing organization, it’s generally considered a good sign. If the bidder has been eliminated from consideration, there would be no questions. The contractor scrutinizes the questions to try to gain an understanding of the outsourcing organization’s motivation. The contractor typically has several business days to respond.

Answers Submitted

The contractor submits its answers to the questions. Note that the questions and answers may go through a couple of iterations.

Best and Final Offer (BAFO)

The contractor may ask one or more of the bidders to submit a Best and Final Offer (BAFO). If a bidder is asked by the outsourcing organization to submit a BAFO, it knows it is on the short list to potentially win the bid. The contractor examines the bid’s history, particularly the questions and answers, and any marketing intelligence that may have been gathered. It then uses this information to change its bid to make it more attractive.

Usually, this means cutting the price through either reduced amounts of labor, a different mix of staffing levels resulting in a lower price, or possibly a change in assumptions that limits the contractor’s risk so that it is more comfortable submitting a more aggressive price. All these assumptions during the bidding (and BAFO) process are documented and are submitted with the bid documents.

The assumptions become part of the contract if the bid is awarded to that contractor. All of the suggested practices are responsibilities of the project manager and as such you really need to prepare yourself for each of them.

Contract Award

The contractor that produced the winning proposal is notified, and then the other bidders are notified. A debriefing is usually scheduled for those that did not win the work.

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