RFP Risk

rfp-risk

When a company wants to do a project, it issues a request for proposal (RFP). Whether an RFP is issued for $100,000 or $1,000,000 there is a risk implicit in the RFP process. Too often companies delay the risk mitigation process until it’s too late and open themselves up to liability. There are certain steps a company can take to establish risk mitigation as a project priority and eliminate working with any bidders that do not practice risk mitigation.

When considering a winner of the next RFP, a company should consider the following steps:

Pre-RFP

In the RFP process, good planning is the cornerstone of success. A business should invest time in planning and executing the RPF process. When adequate preparation is done, it ensures that company needs are met, the RFP aligns with project goals, and all parties involved understand the goal and expectations of the project. In the pre-RFP phase, to mitigate risk companies should gather stakeholder feedback, identify needs, and deal-breakers, and ensure that risk management is established as a selection criterion. By meeting with all the stakeholders involved in the proposal, the company gauges the need of each team based on past performance. It also gives the company a chance to learn from prior errors and omissions.

Furthermore, when a company identifies needs and deal-breakers it ensures that key items and requirements are met in the RFP. Also, when a company establishes risk mitigation as part of the selection criteria for the RFP it attracts companies with better risk mitigation strategies to bid on the RFP.

The RFP

When a company enters the RFP process, it should strive to understand a bidder’s risk management beliefs and practices exhibited throughout the RFP. The presence of certain red-flag answers could heighten the

risk on the project, so companies should tread carefully. A way to ensure that a bidder is committed to risk mitigation is to do due diligence by discussing company’s work performance, asking for documentation such as legal documents, certifications, and permits as well as checking whether subcontractors are to be hired on the project. A detailed risk mitigation strategy for the company should be outlined which includes loss prevention, insurance coverage, job safety, training, etc.

Post RFP

As the RFP process draws to a close, companies should learn important lessons about incorporating risk mitigation into the big picture. Every company can become more selective in the process based on the proposals received, the answers to those proposals, and the identification of deal breakers in submissions. As a result of asking to follow-up questions, many companies realize that the lowest bid may not be always the best bid based on risk mitigation criteria. A low-cost provider without established risk management practices ends up being more of a liability with a high price tag when it comes to claims and litigation. A company must select the best provider not only based on cost and expertise but the commitment to risk mitigation.

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