Decoding Construction RFPs: Navigating Bids With Confidence

December 19, 2023 by Michael Gober & Denis Gritsiyenko

Managing Requests for Proposals (RFPs) in construction is a critical task that demands strategic finesse and a comprehensive understanding of the construction industry.

Though RFPs may feel daunting — for both owners and contractors — they are meant to promote collaboration, communication, and tactical planning in the preconstruction process.

We unravel the complexities of RFPs, providing key insights into their importance and practical tips for crafting and responding to proposals — including cloud-based software that makes the process easier than it has ever been.

CM Fusion: Automate Your RFPs and Take Control of Your Sales and Growth
What Is an RFP in Construction?
When Should the RFP Process Happen?
How Do You Write an RFP in Construction?
How Do You Respond to a Construction RFP?
Why Are RFPs Important in the Construction Industry?
Streamline the Entire RFP Process With CM Fusion’s Cloud-Based Construction Management Software

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CM Fusion: Automate Your RFPs and Take Control of Your Sales and Growth

Here at CM Fusion, we know that the management side of the construction world can be anything but enjoyable.

CM Fusion was created by a group of general contractors who know the pain of over-complicated project management systems and too-hard-to-manage paper trails.

We teamed up with software engineers and built the software we always wished we had.

And we made sure to include RFP management in the plan.

CM Fusion can help you automate your RFPs and improve the number of contracts you are offered.

Organizing your RFPs into a library for easy access and offering integrated communication for all involved are just a couple of the RFP functions available with CM Fusion.

What Is an RFP in Construction?

An RFP is an industry acronym that stands for “Request for Proposal.” Generally, RFPs are generated by the owners of an upcoming project to procure a proposal (sometimes referred to as an estimate) from interested contractors.

RFPs may also be generated by contractors to request proposals from subcontractors for specialty work that requires the expertise of trade workers they do not keep on their payroll. For example, if a general contractor does not employ an electrician, they may send an RFP to several licensed electricians to procure a proposal for that portion of the job.

RFPs are not limited to budget and expense outlines. They are also used to examine factors like schedule requirements, project management experience, the contractor or subcontractor's approach to completing the job, etc.

Do All Construction Projects Require an RFP?

Public projects owned by government organizations are often legally required to go through the RFP process to procure a contractor. This helps keep the process transparent for taxpayers and fair for contractors bidding on government projects.

Private projects are not always required to go through the RFP process — statutes differ by state — but it is common for RFPs to be used on any large or complex construction projects.

How Are RFPs Handled?

RFPs may be publicly listed for any contractor to respond, but it is also common for project owners to send RFPs to a few select contractors.

When a contractor or subcontractor receives an RFP, they will work with their team to evaluate the proposal to see if it is something that they have the time, ability, experience, and finances to complete.

If they like what they see and want a chance at the project, they draw up and send in a bid.

If they are not able to take on the project, they opt for a no-bid and should send in a formal letter sharing why they will not be bidding on the project.

RFP vs. RFQ vs. RFI

Acronyms abound in the construction industry, and these three can be easily confused. To keep everything clear, here is a quick explanation of these three terms:

RFP and RFQ (Request for Qualifications):

Both are used in the pre-construction phase
May be requested jointly
Typically flow from a project owner to a general contractor
RFP (outlined above): request to contractors to submit a proposal for a project
RFQ: request for contractors to provide information about their general project experience, qualifications, and capabilities
Owners may use RFQs to determine if they want to send the contractor an RFP

RFI (Request for Information)

Used in any phase of a construction project from preconstruction through post-construction
Typically flow from contractor to project owner
Document used to obtain clarifications, request specifics, or suggest changes

When Should the RFP Process Happen?

That depends on what end of the project you are on.

If you are sending out the RFP and looking to procure a contractor, you should send an RFP once you have decided on the project and have all of the pertinent information to share.

If you are on the receiving end of the RFP process, your job begins once you are sent an RFP. Once you receive it, you and your team should evaluate it and decide whether you want to bid.

No matter what side you are on, CM Fusion’s cloud-based construction management software can help streamline the process.

How Do You Write an RFP in Construction?

An RFP must include components such as information about the project and budget.

It should also be organized and to the point.

To write a great RFP, you need a good knowledge of the project’s end goal, and you need to write from that perspective.

There are regulations that dictate what an RFP must include, and it is important to follow these.

Writing an RFP can sound intimidating. There are many different parts, and the quality of the RFP can be a determining factor in the overall quality of the project.

But, with the right information and tools, creating a high-quality RFP is much easier than it sounds.

The 8 General Components of an RFP for a Construction Project

#1: Project Owner Information

In this section, there should be details about who owns the project and who the general contractor will report to.

Contact information should be clearly outlined to support clear communication and collaboration throughout the process.

#2: General Project Information

A major component of an RFP is the project overview.

From timelines to budget, knowing the details helps a contractor decide what their team has the capacity for.

This section should include:

What the project is
What the facility will be used for
When it needs to begin
When it should be finished
What roadblocks may stand in the way

Think of this section as a hyper-realistic vision-casting.

#3: The Scope and Goals of the Project

The section of the RFP should define all deliverables and requirements for the project. All tasks should be defined, and all specifications should be addressed.

These specs may include:

Architectural plans
Engineering details and design
Material requirements
Any preferred construction methods
Known constraints for the construction site
Potential roadblocks that may be foreseen

This information should be provided right up front so that no one is caught by surprise and no details are overlooked.

This section ensures everyone is on the same page before diving in.

#4: Budget Information

This creates open communication and allows bidding contractors to evaluate the project realistically and decide if their team can do what you want for the price you are willing to pay.

You might be tempted to fluff up the numbers or over-shoot your budget. Don’t do this. You want everyone on the same page, and honest communication is the key to a good working relationship.

#5: Project Timeline

To the best of the RFP writer’s ability, the estimated project schedule should be included in an RFP.

The timeline should include:

Preferred start date
Preferred end date
Dates for any key milestones
Any individual deadlines that will need to be met along the way

#6: Contract Details

A good RFP should also outline the type of contract that the owner wants to enter into.

Is this a fixed-rate contract?

Is it labor and materials?

This section should outline the contract(s) the owner is open to utilizing so that everyone is on the same page from the start.

#7: Requirements for Submittal

Here is where the information on how to respond to the RFP is found.

The response might need to be:

A certain number of pages
A certain file type (yes, the type of file really does matter)
Submit by date

Information such as previous projects or a team’s qualifications might be needed.

Remember, the company that sent the RFP optimized its requirements to make it easy for them to filter through their options.

Following the submittal requirements is very important.

#8: Criteria for Evaluation

This section is a rubric of sorts. It provides information on how the proposals will be evaluated. The owner should be clear about what criteria they will be using to review all submitted proposals. Contractors should review this section closely before sending in a proposal to ensure they will meet the client’s expectations.

Evaluation criteria allow project owners to objectively review all bids and compare proposals fairly.

The 4 Dos of RFPs in Construction

#1: Establish Clear Expectations

Unmet expectations are often unvoiced expectations.

Each side has expectations, and the RFP is tasked with clearly presenting those of the writer.

Be clear and concise.

Include your expectations with confidence.

#2: Be Clear About Estimations and Qualifications

This goes for both sides of the RFP.

If you are the one sending it out, be sure to include accurate estimations and be clear about the qualifications you want bidders to have.

If you are receiving the RFP, make sure you give honest estimations of what you think the project will cost and how long it will take.

Share your qualifications clearly. Even if they decide that you don’t meet their needs, it is better for that to be decided before the project begins instead of halfway through.

#3: Communicate Scheduling

If you are the one sending the RFP off, be sure to clearly communicate your timing and when you need to get things done.

If you are receiving the RFP, make sure you clearly state when you could have the proposed project finished and what the timeline might look like, even if it doesn’t fully align with the one given in the RFP.

Honesty builds trust, and trust creates a fantastic atmosphere for both parties to work together to finish the project.

#4: Remain Flexible

At the end of the day, flexibility is key.

Your desired contractor might need more time to complete the project than you allowed for in the RFP you sent.

You might have to add to your budget a little bit.

There is always some give-and-take, and staying flexible can keep the stress and tension at bay.

The 3 Don’ts of RFPs in Construction

As much as there are things you should do with RFPs, there are some major don’ts as well.

Writing and receiving RFPs is not an exact science, but some things still stay the same across the board.

#1: Make Assumptions

One thing never to do when writing or receiving an RFP is to make an assumption about the project or the other party.

A well-written RFP won’t leave much room for assumptions, but there is always some space for them to slip in.

If the RFP says something clearly, don’t assume that the writer actually meant something different.

Don’t assume they mean something they didn’t clearly state when going over a bid.

Ask for clarification where needed and resist the urge to assume the needs of the other party.

#2: Set Unrealistic Deadlines

Quality takes time.

You might need something quickly, but if it cannot be done well in that time, a contractor worth their salt won’t stick to your timeline.

Plan your projects far enough in advance to begin the RFP process without putting unneeded strain on those you are requesting the proposal from.

If you are receiving the RFP, make sure you are clear about the time it will take you to reach milestones on the project.

It might be tempting to cut the time a little bit to get the bid, but this will lead to problems down the road.

#3: Withhold Information

Whether you are sending out the RFP or sending in a proposal, be sure you communicate all important information upfront.

No one likes to get knee-deep into something and then find out that they were not given all of the pertinent information from the start.

Save everyone the hassle by maintaining honest communication and sharing all of the information at the beginning.

How Do You Respond to a Construction RFP?

When responding to an RFP, you have two choices: bid or submit a no-bid.

So, you have received an RFP and, after analyzing it — completely and carefully — with your team, you find that the project fits within your team’s ability and capacity.

How do you relay this to the requestor?

Create thorough, realistic estimations: Make sure you factor in all of the costs associated with completing the project and that you do so accurately. You don’t want to underestimate and end up bankrupt. At the same time, keep in mind that it is not uncommon for construction companies to complete a project that results in little to no profit if they know that it will open doors to future projects. Weigh the project, decide what it will take, and then accurately share that information.
Set the expectations clearly: Once you determine that your team can take on the project, make sure you are clear and concise about your expectations.
Take the request seriously: Even if you have worked with the same company many times, be sure to be professional in your response. There are regulations in place that must be followed, and exhibiting professionalism is a great way to build respect for your brand.

Sometimes, you will get an RFP that your team is not able to send a bid for.

If you need to turn down an RFP, create a formal letter sharing that you cannot bid on this RFP.

Keep it professional and offer a reasonable explanation. You should send this in before the bid deadline so that the client isn’t expecting something from you.

Why Are RFPs Important in the Construction Industry?

RFPs benefit project owners and contractors alike. They create a procurement process that ensures a project will start off on the best possible foundation and encourages a positive outcome for everyone involved.

The following facets of the construction industry are directly affected by the RFP process, which contributes greatly to creating structure and standardization — key elements in any successful construction project.

Competitive and Transparent Bidding

When bidding opportunities are opened up to several contractors, competition is introduced to the market. This requires contractors to submit comprehensive proposals that go beyond budgets.

Contractors have to find ways to highlight:

Their experience on similar projects
The expertise they can bring to the current project
Their ideas for ways to be as cost-effective as possible while also providing unique solutions to job-specific issues

With multiple contractors responding to an RFP, they will all strive to find a way to stand out. Project owners have a much higher chance of receiving proposals that will demonstrate innovation.

RFPs also create transparency that helps contractors feel confident about the procurement process. Every contractor receives the same standardized information, clearly outlined expectations, and criteria for evaluation. This foundation promotes trust and collaboration throughout the bidding process.

Quality Assurance and Mitigation of Risk

Every project will have specific criteria related to quality. An RFP should provide specifications about quality requirements so that all bidding contractors know from the start what the quality expectations are. With that information, they can determine if their team has the capacity to meet the stated quality objectives.

Reviewing a contractor’s plan for quality control is one way an owner can work to mitigate risk in a project. The RFP (and an RFQ) can also help mitigate risk by creating the opportunity to evaluate contractor qualifications and reliability. By reviewing past projects and financial information and speaking with references, project owners can avoid choosing a contractor who is inexperienced or cuts corners to save time or money.

RFPs help project owners actively manage the procurement process and make well-informed choices in the preconstruction phase, which is key to avoiding quality issues and other risks, such as going over budget or delaying completion.

Collaboration and Strategic Planning

A successful project requires collaboration between project owners and contractors. The RFP process sets the stage for the level of communication and collaboration that can be expected throughout the whole construction process.

An RFP allows owners to lay everything out about the project in one place as transparently as possible. Contractors can easily see the demands of a project from start to finish and help identify any roadblocks from the get-go. They can communicate with the owners to ask clarifying questions that would prevent future discrepancies that could lead to higher costs or time delays.

A clearly outlined RFP defines an environment where the project owner and contractor can engage in strategic planning to benefit all stakeholders involved.

Streamline the Entire RFP Process With CM Fusion’s Cloud-Based Construction Management Software

If working through the RFP process sounds extensive and overwhelming, that is because it often is.

If you don’t have a system that effectively helps you analyze and select what RFPs you want to bid on, the task might be one you dread.

Never fear — CM Fusion is here to alleviate the stress and difficulty that RFPs often bring.

With our cloud-based construction management software, you can organize your RFPs and make sure you are responding on time.

Our software makes creating RFPs a breeze by providing templates and helping you easily send and receive estimates.

RFPs don’t have to be the bane of your existence; they can become an exciting part of your job, thanks to CM Fusion.