We’re often called by organizations that are preparing to formulate a RFP and are looking for guidance on one of the biggest questions that you need to tackle in the process: Should I include our budget for the project in the RFP?
Mistaken belief in receiving lower prices
Organizations believe that if you provide vendors with your budget, that they will almost certainly charge the maximum amount that your budget allows, and we hear that mistaken justification almost every time. If a vendor knows they are going into a competitive bid process they’re going to give you their best price for the project since they’re afraid to lose out to a less expensive competitor. It is highly doubtful that they will raise their rates and project estimates in this case as it would potentially cause them to lose the project to a vendor that put in a lower rate.
Good talent will not respond
Not knowing whether the project has a budget, or what that budget is, is often a cue for quality vendors to decide against spending the non-billable time working on your proposal since they’re essentially throwing darts in the dark. A quality proposal from a quality company requires that they fully understand the scope of the project, and budget is a large factor in scope. They might pitch you the greatest project ever conceived, but if your budget is 1/10th of the budget necessary to implement it, you’ve just wasted their time and yours.
Working towards the best solution for the budget
With a stated budget vendors know that this is a real project. They know that you’re serious. And using that number they can work with you to formulate their best project pitch. Looking at the budget a web development firm might say “we can’t give you a truly custom solution for this budget, but we can use some off-the-shelf packages to get you 90% of what you need”. Or a firm might say “Ok, this isn’t the budget we’d like to have for this project, but we’ll discount our rates to do it for this price”. Or they might simply say “we can’t do it for anywhere near this price, but perhaps we’ll forward this to a firm we know that might want to bid on it”.
All of these responses are better than wasted time and wasted responses from companies that missed the mark in terms of hitting your undisclosed budget.
The moral of the story? Give your vendors the information they need in order to craft the best proposal that meets your needs but also fits your budget.