RFQ Meaning (Guide To Request For Quotation)
RFQ stands for request for quotation OR request for quote. It is a terminology which is generally used during the procurement process in which an organ of state or a business would request a quotation for the supply of specific goods or services from a prospective supplier. The organ of state or company issuing an RFQ generally know the type of goods or services which they are looking for and are more interested to get Quantities, specifications, pricing, and delivery Schedule from prospective suppliers. Pricing is the most important factor in a request for quote.
Steps To Follow Before or When Completing an RFQ
Step 1: Identify your requirements
The first step is to identify what is expected of you in the rfq or request for quotation. once you have identified what is expected from you terms of resources, quantities, specifications and special requirements, you would have to determine whether can meet those requirements. In answering the question you need to ensure that you would have the following :
- The financial resources
- The human resouces
- The logistical or transportation capabilities
- Reliable vendors from whom you would be able to acquire the goods or services while ensuring you do not compromise on specifications. Example of vendors you can check include jumbo crown mines or Makro
Step 2: Determine How Much it would cost you to execute the work or deliver the goods or services
In determine how much your project would cost, consider the following:
- Cost of the goods or services
- Employee salaries or wages for those that would be directly involved in the project (This should include that of the directors or business owner as well)
- Transport or travel cost
- If it is a service, the cost of softwares if applicable
Determine what it would cost you in executing the tender or contract would guide you setting a profit mark-up
Step 3: Prepare Your RFQ document
The 3rd step involves the actual preperation of your Rfq document. This is the document that you would attche as part of your tender or contract files. The 3rd step involves the following:
- Setting up your price : When setting up your price, take into account the costs in step 2 above. Your price for the goods or services to be provide should not be too expensive to the expend that it exceeds the organ of state or your client’s budget and should not be so low that it would hinder your ability to execute the work. Always guide yourself around what the market price should normally be for those products or services. As a rule of thumb, use a mark-up percentage above what the cost is from step 2 above. We do not recommend a more than 30% mark-up.
- Your Rfq document should also include a timeline of when the goods or services would be delivered as well as the media that would be used
- Also do include your terms and conditions if applicable
- Finally, make sure your contact informations are provided for
Step 4: Review Step 1 to 3 before submission
Difference between an RFQ and an RFP
Now that we have provide clarity on an Rfq meaning, at this stage, it is important that a distinction is drawn between an RFQ and an RFP. RFP stands for request for proposal and is applicable when an organ of state or a company is seeking to identify the most suitable candidate that is able to deliver a specific project in terms of skills, capacity, and experience and within the organ of state or company’s budget. unlike an Rfq, pricing is usually not the most important factor in an RFP. An Rfp is more concerned about overall value that would be derived.
Have you checked out The Tender Guidebook For South Africa ? CLICK HERE. This Guidebook contains a masterclass guide on every topic and terminology in tenders with examples of completed tender documents. Learn how to tender and how to win tenders.
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