LEARNING OBJECTIVES This chapter focuses on needs identification, the first phase of the project life cycle. You will become familiar with: Identifying needs and selecting projects; Developing request for proposal; The proposal solicitation process.
IDENTIFYING NEEDS, PROBLEMS, OR OPPORTUNITIES Needs identification is the initial phase of the project life cycle. It starts with the recognition of a need, problem, or opportunity and ends with the issuance of a request for proposal (RFP).
The customer identifies a need, a problem, or an opportunity for a better way of doing something and therefore sees some benefit to undertaking a project that will result in an improvement or advantage over the existing condition. Before a request for proposal is prepared, the customer must clearly define the problem or need. This may mean gathering data about the magnitude of the problem.
Once the magnitude of the benefit or improvement has been estimated, the customer can determine the budget for a project to implement an improvement. Once it has been determined that there is an overall benefit to be achieved by addressing the problem, need, or opportunity, the customer prepares a request for proposal.
CONTINUE There are often situations where a company has identified several needs but has limited funds and people available to pursue projects to address all of those needs. In such case, the company must go through a decision-making process to select those needs that, when met, will result in the greatest benefit for the cost expended.
PREPARING A REQUEST FOR PROPOSAL The purpose of preparing a request for proposal is to state, comprehensively and in detail, what is required, from the customers point of view, to address the identified need. A good RFP allows contractors or a project team to understand what the customer expects so that they can prepare a thorough proposal that will satisfy the customers requirements at a realistic price.
For example, an RFP that simply request contractors to submit a proposal for building a house is not specific enough. Contractor could not even begin to prepare proposals without information about the kind of house that is wanted. An RFP should be comprehensive and provide sufficiently detailed information so that a contractor or project team can prepare an intelligent proposal that is responsive to the customer need.
REQUEST FOR PROPOSAL To whom it may concern: AJACKS Information Services Company is seeking proposal from contractors with relevant experience to conduct a market survey of the technical information needs of manufacturing firms nationwide. The objectives of this project are:
1.To determine the technical information needs of manufacturing firms nationwide, and 2.To recommend approaches to promote the purchase and utilization of AJACKS Information Services by such firms. This project must provide adequate information for AJACKS company to determine: -future information products or services, and -the best methods for delivering these products or services to its customers.
THE CONTENTS OF THIS RFP 1.Statement of Work. The contractor will perform the following tasks: -a) identify technical information needs of manufacturing firms; -b) determine the best approaches to promote the purchase and utilization of AJACKS Information services by Businesses.
2.Requirements. - The survey should determine the various specific types of technical information needed and the frequency with which each type of information is needed. - The survey should identify the current sources for the various types of technical information that are used by manufacturing firms, their frequency of use, and the firms perception of the value (benefit, cost, accuracy,timeliness) of each source.
- The assessment must provide sufficient detail to permit demand-driven product planning by AJACKS Company. - AJACKS Company is interested in developing and delivering products and services that are valued by the users (manufacturing firms). - The contractor should determine the size of the market for the various types of technical information and determine the market sensitivity to price, timeliness, accuracy, and delivery mechanisms for such inform-n.
3.Deliverables. -A detailed report of the results of Task (a) must be prepared that identifies and analyzes the results for all respondents and also provides detailed analyses (a) for each sector and (b) by firm size. - Based on the analysis of Tasks (a) and (b), provide a detailed report of recommendations of the most effective approaches, and associated costs, to promoting technical information services to manufacturing firms with the objective of getting such firms to purchase and use services.
- Written reports on project progress must be faxed to AJACKS Company on the 15 th and 30 th of each month. 4.Items Supplied by AJACKS Company. - AJACKS will provide the contractor with detailed information about its current information services and products as well as statistical information regarding its current customer base.
5.Approvals Required. - The contractor must obtain the approval of AJACKS for the final version of the survey instrument before it is implemented. 6.Type of Contract. - The contract will be for a fixed price for all of the work the contractor proposes to meet all the requirements of this RFP. 7.Due Date. -The contractor must submit five copies of the proposal to AJACKS on or before February 28 th.
8.Schedule. -AJACKS expects to select a contractor by March 30 th. 9.Payment Terms. -AJACKS will make payments to the contractor according to the following schedule: - one-third of total amount when project is shown to be one-third complete; - one-third of total amount when project is shown to be two-thirds complete; - one-third of total amount when AJACKS is satisfied that the project is 100% complete.
10.Proposal Contents. The contractors proposal must include the following: A.Approach. - A discussion that indicates the contractor clearly understands the RFP and what is expected. Also, a detailed discussion of the contractors approach to conducting the project and a detailed description of each task and how it will be accomplished.
B.Deliverables. - A description of each deliverable the contractor will provide. C.Schedule. - A bar chart or network diagram showing the weekly schedule of the detailed tasks to be performed in order to complete the project by the required project finish date. D.Experience. - A discussion of recent similar projects the contractor has performed, including customer names, addresses, and phone numbers.
E.Staffing. - The names and detailed resumes of the specific individuals who will be assigned to work on the project and highlights of their experience on similar projects. F.Costs. - The total fixed price must be stated and supported by a detailed breakdown of hours and an hourly cost rate for each person who will be assigned to the project.
11.Proposal Evaluation Criteria. AJACKS Company will evaluate all contractor proposals according to the following criteria: A.Approach (30%) The approach and methodology the contractor proposes to conduct the survey and analyze the results. B.Experience (30%) The experience of the contractor and the staff assigned to the project in performing similar projects.
C. Price (30%) The fixed price of the contractors proposal. D. Schedule (10%) The detail and overall duration of the contractors proposed schedule to complete the project on or before the required project finish date.
Following are some guidelines for drafting a formal request for proposal to external contractors: 1.An RFP must provide a statement of work (SOW).An SOW deals with the scope of the project, outlining the tasks or work elements the customer wants the contractor or project team to perform. 2.The RFP must include the customer requirements, which define specifications and attributes. Requirements cover size, quantity, color, weight, speed, and other.
3.The RFP should state what deliverables the customer expects the contractor or project team to provide. Deliverables are the tangible items that the contractor is to supply. 4.The RFP should list any customer-supplied items.The RFP might state that the customer will supply a copy of its logo for use on the brochure.
5.The RFP might state the approvals required by customer.For example the housing customer may want to review and approve the plans before construction is started. 6.Some RFP mention the type of contract the customer intend to use. It could be fixed price, in which case the customer will pay the contractor a fixed amount regardless of how much the work actually costs the contractor.
7.An RFP might state the payment terms the customer intends to use. For example, the brochure customer may intend to make one payment at the end of the project. 8.The RFP should state the required schedule for completion of the project. It might state simply that the house must be completed within six months, or it might include a more detailed schedule.
9.The RFP should provide instructions for the format and content of the contractor proposals. If the customer is going to compare and evaluate proposals from several contractors, it is important that they be consistent in format and content so that a fair evaluation can be made. 10.The RFP should indicate the due date by which the customer expects potential contractors to submit proposals.Customers want to receive all proposals by a certain date so that they can compare and evaluate them at the same time.
11.An RFP may include the evaluation criteria.Criteria might include the following: -the contractors experience with similar projects; -the technical approach proposed by the contractor; -the schedule; -the costs.
12.In rare cases RFP will indicate the funds the customer has available to spend on the project.Usually, the customer expects contractors to submit a proposal that meets the requirements in the RFP at the most reasonable cost.
SOLICITING PROPOSALS Once the RFP has been prepared, the customer solicits proposals by notifying potential contractors that the RFP is available. One way for customers to do this is by identifying a selected group of contractors in advance and sending each of them a copy of the RFP.
Business customers and contractors consider the RFP/proposal process to be a competitive situation. As a final note, we should repeat that not all project life cycles include the preparation of written request for proposal and subsequent proposals from contractors. There are other projects in which requirements are not written down in a formal RFP, but are communicated to several providers or suppliers (contractors).
Although projects can be businesslike or informal, they all start with the identification of a need, problem, or opportunity and then proceed to the customers defining ( in writing or orally) the scope, requirements, budget, and schedule for what is to be accomplished.