Proposal (business)

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A business proposal is a written offer from a seller to a prospective sponsor.

Contents

Business proposals are often a key step in a complex sales process, where a buyer considers more than price in a purchase. [1]

A proposal puts the buyer's requirements in a context that favors the seller's products and services, and educates the buyer about the seller's capability to satisfy their needs. [2]

There are three distinct categories of business proposals: formally solicited, informally solicited, unsolicited.

Solicited proposals

Solicited proposals are written in response to published requirements, contained in a request for proposal (RFP), request for quotation (RFQ), invitation for bid (IFB), or a request for information (RFI). [3]

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 organization 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. [1]

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 delivering 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. [1] 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. [1]

Request for information (RFI)

Sometimes before a customer issues an RFP or RFQ or IFB, the customer will issue a Request for Information (RFI). 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. [1]

Informally solicited proposal

These types of proposals are made when a private firm, government agency, or association negotiates to supply a service or product to a single company and when a company has excellent credibility and a track record of achievements. The standard format for this type of proposal consists of information about a specific product, including the price and delivery schedules. Some advantages to this include not having to have resources to win a contract and the firm or client knows what time the work will be coming.

Internal proposals

Internal proposals are ideas or projects that are presented to whoever holds the position of top management in a company. These types of proposals can be written by a particular individual, group, department, or division of a particular company. One example of this is when the manager of a product line writes a proposal suggesting that the company should robotize the production process. Some advantages to this includes easier communication, knowing the client's needs and making fast decisions. Some advantages to this may include competition from other companies and the loss of management champions. [4]

Unsolicited proposal

Unsolicited proposals are generic marketing brochures used to introduce a product or service to a prospective customer. They are often used as "leave-behinds" at the end of initial meetings with or customers or "give-aways" at trade shows or other public meetings. They are not designed to close a sale, just introduce the possibility of a sale. [5]

Components

Formally solicited proposals

  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 program will be managed
  5. Cost Volume, which provides all costing data, as well as implementation plans and schedules [1]

Informally solicited business proposal

  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, Descriptions of previous projects [2]

Managing business proposals

Proposal management often consists of the following basic roles and responsibilities:

Some writers refer to key stages in the proposal management process using colour codes to denote milestone reviews, for example a black hat review. [6] The Association of Proposal Management Professionals (APMP) refers to a black hat review as an independent review of the strategies and proposals likely to be put forward by competitors. [7] Other colours are used in relation to teams: a pre-writing strategy review is sometimes called a "Pink Team", a formal draft review may be called a "Red Team", and the term "Gold Team" indicates a final pre-submission review. [8] [ better source needed ]

Inherent to the process of managing proposal is the decision of whether to submit a bid, which is underpinned by the capture plan. [9]

See also

Related Research Articles

<span class="mw-page-title-main">Sales</span> Activities related to the exchange of goods

Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred to as a "sale".

A request for proposal (RFP) is a form of reverse auction that solicits a business proposal by an organisation interested in the procurement of a service or product from potential suppliers. It is usually part of a complex sales process, and made through a bidding process.

A request for information (RFI) is a common business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes.

A statement of work (SOW) is a document routinely employed in the field of project management. It is the narrative description of a project's work requirement. It defines project-specific activities, deliverables and timelines for a vendor providing services to the client. The SOW typically also includes detailed requirements and pricing, with standard regulatory and governance terms and conditions. It is often an important accompaniment to a master service agreement or request for proposal (RFP).

Purchasing is the procurement process a business or organization uses to acquire goods or services to accomplish its goals. Although there are several organizations that attempt to set standards in the purchasing process, processes can vary greatly between organizations.

E-procurement is a collective term used to refer to a range of technologies which can be used to automate the internal and external processes associated with procurement, strategic sourcing and purchasing.

Complex sales, also known as Enterprise sales, can refer to a method of trading sometimes used by organizations when procuring large contracts for goods and/or services where the customer takes control of the selling process by issuing a Request for Proposal (RFP) and requiring a proposal response from previously identified or interested suppliers. Complex sales involve long sales cycles with multiple decision makers. Multiple stakeholders and stakeholder groups contribute to every complex sale. These types of sales can take up to 8 to 18 months as multiple people from higher management are involved.

Strategic sourcing is the process of developing channels of supply at the lowest total cost, not just the lowest purchase price. It expands upon traditional organisational purchasing activities to embrace all activities within the procurement cycle, from specification to receipt, payment for goods and services to sourcing production lines where the labor market would increase firms' ROI. Strategic sourcing processes aim for continuous improvement and re-evaluation of the purchasing activities of an organisation.

In the United States, the processes of government procurement enable federal, state and local government bodies in the country to acquire goods, services, and interests in real property. Contracting with the federal government or with state and local public bodies enables interested businesses to become suppliers in these markets.

Purchasing is the formal process of buying goods and services. The purchasing process can vary from one organization to another, but there are some common key elements.

In procurement technology, ERFx is an acronym for electronic request for [x], where x can be Proposal (RFP), Quotation (RFQ), Information (RFI) or Tender (RFT). Other pseudonymous acronyms include ITT and PQQ. All relate to a similar activity: a buyer requesting information from potential suppliers for the purpose of evaluation and comparison. Often this is part of a tendering exercise. The more structured this information is, the easier it is to compare the suppliers. For example, it is more effective to ask 20 multiple choice questions than it is to ask 2 essay questions, as long as suppliers have an opportunity to provide commentary to qualify their answers. Therefore, eRFX software should help the buyer to compare suppliers in useful ways – e.g., apples vs. apples.

An online marketplace is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.

A request for quotation (RfQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RfQ generally means the same thing as Call for bids (CfB) and Invitation for bid (IfB).

Presales is a process or a set of activities/sales normally carried out before a customer is acquired, though sometimes presales also extends into the period the product or service is delivered to the customer.

<span class="mw-page-title-main">Vendor</span> Supplier of goods or services

In a supply chain, a vendor, supplier, provider or a seller, is an enterprise that contributes goods or services. Generally, a supply chain vendor manufactures inventory/stock items and sells them to the next link in the chain. Today, these terms refer to a supplier of any goods or service. In property sales, the vendor is the name given to the seller of the property.

A government contract proposal, often called a government proposal in business, is a response to written requirements issued by a government entity that wants to buy something. All areas of government use written requirements to buy products or services to make purchasing fair and reduce costs. Outside of business circles, government proposal is commonly used to mean a legislative or other proposal by a government, in other words a legislative motion.

<span class="mw-page-title-main">Reverse auction</span> Auction with one buyer and many potential sellers

A reverse auction is a type of auction in which the traditional roles of buyer and seller are reversed. Thus, there is one buyer and many potential sellers. In an ordinary auction also known as a forward auction, buyers compete to obtain goods or services by offering increasingly higher prices. In contrast, in a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers underbid each other.

<span class="mw-page-title-main">Invitation to tender</span> Business process

An invitation to tender is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business activity in works, supply, or service contracts, often from companies who have been previously assessed for suitability by means of a supplier questionnaire (SQ) or pre-qualification questionnaire (PQQ).

A request for qualifications (RFQ) is a step sometimes used in the formal process of procuring a product or service, for example by a government agency. It is typically used as a screening step to establish a pool of vendors that are then qualified, and thus eligible to submit responses to a request for proposals (RFP). In this two-step process, the response to the RFQ will describe the company or individual's general qualifications to perform a service or supply a product but generally will not include specific details or price proposals.

Bidder Conferences are common for major projects and programs that are intended to be performed as Cross-Corporate Project Business activities. They are used once the owners of the project have decided to buy work items from the sellers, who may be product vendors and/or service providers. A Bidder Conference reflects the project owners’ intentions that all vendors have an equal understanding of the project's requirements and the procurement processes before they submit their offers. This ensures that the bidding process is fair to all parties involved.

References

Cited references

  1. 1 2 3 4 5 6 Newman, Larry. Shipley Associates Proposal Guide, (Proposal Guide Archived 2008-11-11 at the Wayback Machine )
  2. 1 2 Ricci, Laura; (1996–2007), The Magic of Winning Proposals (publisher R³) ISBN   0-9657399-1-0.
  3. ↑ eyouens (2010-09-01). "The ABCs of IFBs, ITBs, RFPs, RFQs, and RFIs". Coates’ Canons NC Local Government Law. Retrieved 2024-02-15.
  4. ↑ Hamper, Robert J,. and L. Sue Baugh. Handbook for Writing Proposals. New York: McGraw-Hill, 2011. eBook Collection/(EBSCOhost). Web. 15 Apr. 2014.
  5. ↑ Khalsa,Mahan. Franklin Covey, Get Real [ permanent dead link ]
  6. ↑ "Black Hat Reviews: Analysis of the Competition". Allied Proposal and Contract Management. Retrieved 30 December 2020.
  7. ↑ "APMP Foundation Level Accreditation – Glossary of Terms" (PDF). Association of Proposal Management Professionals, Inc. Retrieved 30 December 2020.
  8. ↑ Dickson, Carl. "The Problem with Red Teams is the Color Team Model". CapturePlanning.com. Retrieved 30 December 2020.
  9. ↑ Newman, Larry (24 May 2008). "Capture Planning" (PDF) (Podcast). Association of Proposal Management Professionals, Inc. Retrieved 9 May 2020.

General references

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