Why RFPs Waste Time: Choose a Better Approach to Finding a Great Consultant — Part I

TargetedImagine that the foundation for which you work needs to find consulting expertise for a particular project. Everyone agrees to develop an RFP to get qualified consultants to respond. That’s thorough, fair, and transparent. Right?

Wrong.

I rarely respond to RFPs for consulting engagements. Their expectations are not thorough, fair, or transparent. I find most RFPs to be a poor use of time and an impediment to my ability to improve our clients’ conditions.  What’s worse, many foundations fail to understand how an RFP process can waste their time and hinder their success.

Foundations use RFPs to find consultants for four primary reasons:

1. They hope the proposals will give them free insights.

2. They don’t know many consultants and hope to identify good ones.

3. They believe the RFP process demonstrates the holy grail of “transparency.”

4. They declare it to be “our policy.”

All of these reasons are flawed. While the basic goals are fine, none of them requires the use of a time-consuming and talent-limiting RFP process. Here’s why RFPs rarely fulfill their goals:

1. Using RFPs to get free advice. I once had a foundation client solicit consultants using an RFP, and he specifically told me that his plan was to identify the best ideas from all the proposals and then have the chosen consultant (likely the cheapest) implement them. Like most consultants, I find this approach offensive. It takes a tremendous amount of unpaid time and uncompensated resources for a consultant to put together a well-considered proposal. It is not the job of consultants — often sole proprietors without consistent income — to subsidize philanthropic foundations that have millions or billions in assets.

What’s better: I would rather meet a foundation president for lunch and share free advice — even if I know I won’t get the job — than spend 16 hours putting together a proposal that might or might not get approved. It’s a more honest relationship and leads to better conversations, network building, and opportunities for everyone down the road.

2. Using RFPs to find high-quality consultants. Most of our business, like that of any consultant worth his or her cost, comes from referrals. Although there are always exceptions, consultants who have time to respond to multiple RFPs either aren’t getting enough repeat or referral business or they need to charge high fees to compensate for all the staff time spent submitting proposals. If this is the case, these probably aren’t the best consultants to choose among.

What’s better: I have successfully responded to RFPs from clients with whom I had built relationships. I’d take three strong repeats or referrals over three unknown proposals any day. Referrals are built on positive relationships. RFPs are built on assumptions and guesswork.

3. Using RFPs to demonstrate transparency. Foundations should be transparent — they are stewards of the public trust. But there is little that’s transparent in the RFP process. Foundations don’t publicize which consultants they invited, or why. The consultants themselves rarely get to meet with the ultimate decision makers and therefore have no way of fully understanding the foundation’s needs or objectives.

What’s better: The foundation could invest less of its own staff time and yield a better result by seeking good referrals and then inviting those consultants in for meaningful, open conversations with decision makers.

4. Its our policy,no matter what. Some foundations have a policy to ask at least three consultants to submit proposals for every project. This is frankly a waste of time. If a foundation knows of a terrific consultant with whom they have worked before, who has demonstrated quality results, is equipped to do the work, and whom they want to hire, why not just hire that consultant again?

What’s better: Trust yourself and your staff to know when there’s a better way to hire a consultant. When issuing an RFP is the best way to get what you need, go for it. Otherwise, read next week’s newsletter for 5 better ways to find a high-quality consultant — and save your time and resources for more urgent needs.

Or get more details now with the full article at Why RFPs Waste Time – Choose a Better Approach to Finding a Great Consultant.

 

Kris Putnam-Walkerly is a philanthropy expert and consultant. If you found this blog post useful, please subscribe. On Twitter? Follow me @Philanthropy411.

Posted by Kris Putnam-Walkerly © Kris Putnam-Walkerly and Philanthropy411, 2014.

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5 thoughts on “Why RFPs Waste Time: Choose a Better Approach to Finding a Great Consultant — Part I”

  1. Kris, your RFP posting articulates many of the problems associated with this process. I would like to add one other point to your case. The RFP can shortchange what the Foundation ultimately gets as RFPs tend to “over-structure” the request. Speaking from my own perspective as an evaluator–this can cut off meaningful discussion about tradeoffs, the desired audience and the actual user of the information. It can shortchange meaningful decision making about foundation or grantee priorities and the tensions between them. So too it might limit foundation exposure to innovations in evaluation that might serve the foundation better than what they would get in from the RFP. Of course the work needs to get scoped out but start with good qualifications and references. Then work together to develop the scope of work. I look forward to your thoughts about alternatives in part II.

    Finally I want to wholeheartedly second one of you points. I have never understood why some foundations will not to share the names of others receiving the RFP. What’s to be gained? I assume that it has something to do with the worry that it will scare off some potential bidders; or that the bidders might join up to work together. In either case, more transparency will allow for better decision making on both sides of the exchange, as the bidders list is very good information about what you might be seeking in a consultant.

    Keep up the great work, Kris

    1. I agree Patti! If you seek to hire an expert, then you should allow their expertise to frame the solution. I just did this hiring a design-build firm to redo my laundry room after our dryer caught on fire (yes dryers really catch on fire). I had ideas of what I wanted. He offered lots of alternative and mostly better ideas about how we could use the space, and together we came up with a plan that looks great and is highly functional. Yes, it is a little more expensive but I am thrilled with the results. It’s really no different than hiring a consultant — do you want an expert to help take your work to the next level, or a hired hand to implement a pre-determined plan?

  2. Aptly stated, Kris. There is a place for RFPs, just as there is a place for detailed grant applications. However, foundations should always do a cost-benefit analysis when considering such vehicles, i.e., they should look at the aggregate cost in time and energy of all who will submit a proposal vs. the benefit that will accrue to only one of them. One could likely devise a formula to get at this: RFPr x np x cp = Cv x 1 (RFP respondents x the number of proposal pages x the cost to produce each page = the contract’s total value x one selectee.) In Project Streamline parlance, we call it “net grant”, and so in RFP parlance, perhaps you can call it “net consultancy.” Thanks for raising this important issue.

    1. Thanks Kyle! I love the idea of “net consultancy.” I think foundations could do a better job of thinking about the cost they spend internally in order to “spend” money on consultants and grantees. I think most would be shocked to learn what it costs. A formula I use a lot is: Hourly rate of foundation staff people (calculated at total salary + benefits, divided by 2080 hours) x as many hours they spend thinking, planning, drafting, writing, revising, emailing, following up, reviewing, interviewing, deciding = total internal cost. Subtract that from the total cost of the consultancy/grant, and you can quickly see how all that staff time adds up.

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