O Budget, Where Art Thou: On the Importance of Budget Limits in RFPs

In my first weeks and then months of going through Requests for Proposals (RFPs), Requests for Quotations (RFQs) and other tenders, I could not help but notice one stark difference in the tender documentation released by municipalities all over Canada: the presence or lack of budgets.

When a tender document does not have a budget specified, I always ask the municipality or buyer if they can release this information. Some do, and some do not. I am always relieved when they do since this is an essential component in the bidding process.

There are surely a myriad of reasons buyers do not want to specify their budgets; I would welcome a blog post by a councillor or CAO that goes through these reasons since I am curious to learn more beyond the obvious one that buyers do not want all bidders to come within fifty dollars range of their budget.

However, knowing the budget is essential to creating a proposal because the same service can cost something vastly different based on the scope and hours involved.

As an example, Strategic Steps Inc. (SSI) has facilitated governance review sessions for boards of organizations that cost as little as $10,000, and an over $30,000, depending on the factors noted above as well as the size of the board and municipality.

For a simple board of trustees’ governance session that involves a survey, analysis and presentation, the budget is quite a bit less than a more fulsome engagement. Adding in elements like a formal governance framework, benchmarking with other municipalities, board engagement, current state assessment, gap analysis and a governance improvement roadmap adds hours to the project, which increases the budget.

The presence of a budget is similarly important on other types of work as well, from any type of review, to strategic planning and leadership development. Working with a varied complexity of municipalities and organizations, I have seen that an engagement is by no means cookie cutter, but rather an expanding scale depending on multiple factors.

These budgets even allow for potential proponents to determine whether they should bid on projects. Very recently, SSI was debating on bidding on a review process for a municipality in BC. I am thankful that said municipality included their budget, since this allowed us to check whether we could get the work done within the hours that would fit within the budget specified. Ultimately, we realized that we would not be able to meet the budget constraints, hence choosing not to bid. This saved us a lot of time, as opposed to sending in a bid that would have been over the set budget.

As I had noted earlier, organizations have several reasons why they choose not to publish budgets. When budgets are absent, I do some research into municipality size and other factors to formulate a budget to what the buyer may be looking for.

However, having a budget approximation to go on makes creating a proposal to fit buyer expectations easier. This in turn brings in realistic, higher quality proposals to the buyer.

Interested to learn more on the best practices for RFPs? Info@strategicsteps.ca