What Does a Good RFP Cost?

A wide consensus has been reached that bad RFPs are commonplace - the product of DIY or shoddy consultant cut and paste techniques. Certainly, one of the barriers to doing a good RFP is the cost of preparing one.

To that end, I am curious what would a good one cost?

Obviously, there are lots of factors involved, so there is no single answer but I am looking for some...

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I'll be the first to stick my neck out here...:)

Consulting fees to prepare an RFP for security/surveillance projects is typically 5% to 20% of the total installed system cost. The percentage is smaller for larger projects and larger for smaller projects.

For a $100,000 project, a fee in the $15,000 to $20,000 range (15-20%) would be common. On a $1 million dollar project, a...

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Michael, this helps and puts the discussion to a strong start!

My first / main question is: How many hours does this assume? For instance, the 100k project? Is that 100 to 200 hours or so?

As you mention, certainly it depends on the scope / what's included.

Could an end user hire a consultant say for 10 or 20 hours to provide guidance? Even that would seem to provide...

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John,

In answer to your first question, I would estimate somewhere between 80 and 120 hours of effort for a $100K project. This would include doing a basic needs analysis, preparing the RFP and drawing attachments, attending the pre-bid conference, and assisting with evalution of the proposals. Construction phase services would be extra.

In answer to your second question,...

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Wow, that's quite a story!

I am curious. Is there copyright issues involved there? Does the consultant typically retain copyright or the end user? Can the end user who purchases a consultant's service than freely share with others?

Specs are so routinely chopped and re-used, I have never given much thought to this aspect.

Many consultant and engineer contracts are modeled loosely after architect (AIA) contracts. These contracts typically state that drawings and specifications are "instruments of service" and that the creator (architect or consultant) retains copyright. The owner is granted rights to use the documents on one specific project and may not reuse them on other projects without further...

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I'm not getting paid enough :-(

"On a $1 million dollar project, a fee in the $50,000 to $75,000 range (5% to 7.5%) would probably be in the ball park." - I spent approximately 60 hours just writing the RFP on our project, not including the RFI, system evaluation criteria and the actual evaluations. And although I can't reveal the total project cost, if I received 5% to 7.5% of it...

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Carl, Always room for another good consultant if you want to hang out your shingle!

Michael,

It's already hung on LinkedIn but I'm not quite ready to "quit my day job". ;-o

For a $450K airport CCTV upgrade project that we did the design for as a subconsultant, our fee was about $35K including preparation of drawings, specifications, answering RFI's, reviewing submittals, attending construction meetings and being present for testing and turnover. Not sure if we broke even or not. A lot depends on the customer, the primary engineering firm, and the integrator. ...

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In your experience, where is the line between the RFP's consulting costs being higher than the savings achieved by going into the competitive process? What % variations are you seeing among the competent respondants to well specified RFP's? (I know this will generate broad, opinion based answers - but then every situation is different anyway)

Undisclosed,

I think the primary issue is protection, not cost. For the end user, having no or poorly written RFPs can result in dire consequences. I've seen any number of projects that didn't meet expectations. I believe that the lack of clearly defined objectives and requirements is the cause of many of these issues. A well-written RFP can help insure the end result meets the needs...

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In my experience, you will generally see a tighter grouping of bid prices when you have a well-written RFP than when you don't. Many of my clients have stated that they felt my services have more than paid for themselves in terms of both cost savings and reduced aggravation. What you also hopefully avoid is a situation where a proposer seriously underbids a job because he misunderstands the...

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Do most companies that offer design services have E&O insurance or do they just wingit and hope everything turns out ok? We were retained for a large football stadium and they required E&O and it was very costly. Any thoughts here?

Do most companies that offer design services have E&O insurance or do they just wingit and hope everything turns out ok? We were retained for a large football stadium and they required E&O, and it was very costly. Any thoughts here?

Most contracts for consulting and/or design services do require professional liability/errors and omissions...

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I believe a well considered RFP by a knowledgible consultant ultimately saves the client money in the long run by keeping the number and size of the variations to a minimum.

In my part of the world there are a few integrators who look at "what's not included" in the RFP, win the contract then cream it on the...

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Michael, thanks. So is E&O insurance paid per year or per project or? Any rule of thumb about the amount paid?

It's paid per year and the % matters by how much your exposure is and the level of the professionals working for the firm.

E&O premiums are typically based on the consultant's gross revenue (billings). My experience has been that annual premiums average about $1,500 per $100,000 of revenue billed, so a consultant who was billing a half-million a year might pay $7,500 per year for insurance. You make a revenue projection at the beginning of each policy period and then get audited near the end of the year. If...

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A little outside the core discussion of costs for a good RFP, but I often wonder about the definition of "consultant". As the migration to IP based CCTV systems progressed, many end users turned to datacom/telephony engineering firms, even A/V consultants, asking them to "add a security package" to their designs. Our rep firm often gets called by these firms for advice, and we find ourselves...

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John,

Next time ask this question:

What does it cost an integrator to respond to a complex RFP?

I can relate to and agree with Michaels comments on this subject. I'm a consultant working in Australia and have also done some international work. The majority of clients (some such as Carl excluded of course) dont understand why they require CCTV in the first place, and therefore what function it needs to perform. This is the first hurdle for a consultant - in Michaels words, the needs...

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John, This was a great read. Thank you.