What is a Request for Quotation (RFQ) in construction?

A Request for Quotation (RFQ) is a process that construction contractors or owners begin when they have a specific set of needs for a project. It involves sending out a document that details the requirements for the subcontractor or supplier to review. After their review, the subcontractor or supplier then sends back a quotation — also known as a quote.

The quote is a document that lists the labour, materials, and quantities of materials that the team who receives the RFQ will need to complete the required work. The quote will provide a total sum of the costs, which can be the deciding factor as to whether the owner or contractor will go ahead with the contracting process.

Construction owners or contractors send out RFQs to different companies and can then compare the different materials and pricing once they’ve received the quotes.

Why are RFQs important?

The importance of an RFQ in construction procurement goes beyond just understanding the potential costs of work. While traditionally the RFQ process was more focussed on receiving price estimates from potential contractors or vendors, RFQs are now often used as an opportunity to ask for extra information about the company receiving them.  

It’s normal for contractors or owners to send out the same RFQ to a variety of companies, as comparing the quotes is a great way to get a clearer idea of what the industry-standard price for the work is. It can also help to identify anything that has been missed in the initial RFQ.

These days, most teams will not choose a company purely based on price:

The Evolution of RFQs

Before the construction industry started to digitally transform, RFQs were mainly sent out to companies in the post. 

This manual, time-consuming method of sending out RFQs was expensive and also stopped companies from sending them out to many different vendors. This is because it took too much time and needed a lot of resources, and the postage expenses added up.

The introduction of email speeded things up a lot, and also allowed companies to send out multiple RFQs to different companies a lot more quickly — and cheaply. Today, construction workers enjoy more sophisticated methods. Construction management platforms like Procore offer templates to speed up the creation of RFQs. They also have tracking systems that help you keep up to date with the status of your RFQs — whether you’ve received a quote or been asked for follow-up information, for example.  Technology has made it a lot easier to transfer information, and helps with receiving better quality information back, too.

What information does an RFQ include?

An RFQ needs to include all the information about the project as well as the owner or contractor to help the vendor or supplier produce a high-quality, comprehensive quote. This includes:

+ Exact details, quantities, and specifications of materials and services
+ The proposed timeline for the work
+ Delivery information
+ The evaluation process
+ Timelines for reviewing and choosing a quote
+ Payment terms
+ Terms and conditions of the contract
+ Information on submitting the quote

The RFQ Process

There are five key steps to the RFQ process. Each step is equally important and needs to be given enough time and focus to make sure that companies both send out the right information and get back high-quality quotes. These five steps are:

1. Preparation and Issuance

The first step of the RFQ process involves preparing the document to send to the subcontractors or vendors. This includes making sure that all the information is accurate and detailed, and choosing a list of companies to send the RFQ out to. Once this is all ready, the company can send out the RFQ either using construction management software or by email.

2. Submission by Suppliers/Contractors

After being issued the RFQ, the supplier or contractor will review it and gather the information about what the labour and materials will cost and how much they will charge.

3. Evaluation of Quotes

Once the company that sent out the RFQ has received quotes from all of the companies they approached, the sender needs to compare all of the quotes and evaluate them. It’s important to check all the information for accuracy and clarity. Companies often use a scoring matrix to assess quotes. This is a way of standardising how to score the quote based on the factors that the company sees as the most important.

4. Awarding the Contract

After evaluating the quotes and narrowing down the best company for the project, the next step is reaching out to the chosen company to award the job. There may be a process of asking for clarification on some of the items on the quote, as well as minor negotiations. When everything is agreed by both parties, they can complete the deal by signing the contract.

5. Post-RFQ Considerations

After the RFQ process, there are still a few things to consider and finalise. Working with the subcontractor, the owners or contractors need to confirm all the timelines, deliverables, and standards to make sure everyone has agreed. Kick-off meetings and submitting information like safety plans and material specifications can help with this.

It’s also best practice to reach out to the companies who submitted an RFQ but were not successful:

Best Practices for Creating Effective RFQs

Creating and sending a high-quality RFQ means you are much more likely to get high-quality responses and quotes in return. Here are some tips for creating great RFQs:

+ Clearly define the project’s scope
+ Include detailed specifications, like technical details, drawings, bill of quantities, and standards
+ Provide clear information about the expected deliverables
+ Include deadlines such as start dates, end dates, and milestones
+ Use clear, consistent language
+ Be transparent about your criteria for choosing a quote
+ Include clear instruction for the submission, such as format, deadline, and key points of contact

Frequently Asked Questions

What’s the difference between an RFQ, an RFI, and an RFP?

A Request for Information (RFI) is another procurement document that is sent earlier than the RFQ. While the RFQ asks for information on pricing of labour and materials, an RFI asks for information about company information, references, experience, and case studies.

A Request for Proposal (RFP) is another type of procurement request, and is usually used for more complex projects. This request asks for input on how a company would complete a project based on the objectives and allows for more flexibility than an RFQ. You can read more about this in our article explaining the differences.

Who is responsible for creating and sending RFQs?

In larger organisations, the procurement team is responsible for managing the RFQ process. The responsible roles include the procurement manager, purchasing officer, and procurement specialist. In smaller organisations, it’s likely to be the project manager or construction manager that owns the process.

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