RFQ

RFQ stands for request for quotation. Across most industries it means the same thing: the buyer already knows exactly what it wants and asks several suppliers what it will cost. The quote that comes back is a priced offer for that defined scope.

On a construction project, RFQs are sent by head contractors to subcontractors and suppliers for packages such as reinforcement supply, signage, line marking or small trade packages. Government agencies also use RFQs for lower value work, with the thresholds set by each agency's procurement policy.

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The buyer issues a short package: scope, quantities or drawings, specification references, required dates, and the key commercial terms such as payment terms and retention. Suppliers return a price, usually with inclusions, exclusions and validity period.

The buyer then levels the quotes so they compare like for like, clarifies any gaps, and places a purchase order or subcontract with the chosen supplier. The quote, and anything attached to it, often becomes part of that order, so exclusions buried in a quote can become exclusions in the contract.

For a head contractor, the RFQ stage also feeds the budget. Quotes received at tender stage are often what the estimate was built on, so once the job is won, the package is usually re-quoted or negotiated against those numbers. Keeping the original quotes, clarifications and levelling sheets together saves time when the package is let and helps explain any movement from the tender allowance.

The labels overlap and clients use them loosely, but the usual distinction in Australia is this.

• RFQ. A defined scope, price is the main criterion, a short response and quick turnaround.

• RFT (request for tender). A larger or more complex package with full documents, formal submission rules and evaluation on price and non-price criteria such as methodology, programme and experience.

• RFP (request for proposal). Used when the buyer knows the outcome it wants but invites respondents to propose the solution, common for consultants and design and construct work.

Whichever label is used, read the conditions of the request. They set out what makes a response conforming.

In practice, many head contractors use RFQ for supply-only and small trade packages, and RFT for major subcontracts such as structure, façade and services.

• Vague scope. If the request does not define the scope, every quote prices something different and levelling becomes guesswork.

• Comparing headline prices only. Check exclusions, validity, lead times and assumptions before picking the cheapest.

• Ignoring the terms. A supplier's own terms of trade can override yours if nobody reconciles them.

• No paper trail. Clarifications by phone are easily disputed later. Record them and issue them to every supplier quoting.

Letting quotes expire. If the order is placed after the validity period, the supplier can reprice. Confirm the price is still held before you commit.