An RFP (request for proposal) is a formal process to evaluate and compare those companies who wish to supply specific goods or services to your company. They are commonly used in the selection of corporate travel management companies, however, there are positives and negatives surrounding this process.
Your organisation may have numerous solutions in place to manage travel, whether that is a TMC, local agent, booking direct or a combination of solutions. Choosing to go out to market for a central travel management provider can cost you both time and money, however, there are benefits to aligning your travel into one place.
When you have to do it
Conducting an RFP can sometimes be unavoidable due to externally imposed requirements. Public authorities are obliged to undertake a formal RFP process for any procurement projects worth more than a certain amount. Other government bodies are obligated to use a specific TMC based on a framework mandated by a purchasing consortium. Some companies’ corporate governance will therefore include guidelines to use RFPs, but for most it is an option to be considered when selecting a supplier.
When you have an option
So what should you consider in deciding whether an RFP is the best route?
- Scope You need to scope both your programme and potential providers. Your annual business travel spend is also a key factor in the process. Travel budgets can range from €100,000 to over €10 million. You might want to consider if a full RFP process is worth the time and cost for anything under €500,000. Although it’s perceived that pre tender meetings can cause an unfair advantage, it’s advisable that you at least conduct some form of introductory meeting with potential TMCs to weed out any suppliers that could be a bad fit for your company. This will save time in the long run when waiting for bid/no bid responses.
- Research Even if you plan a comprehensive RFP running to many pages, you still need to understand which questions are really relevant to your decision-making process rather than creating a tickbox exercise. A scoring system for the responses may seem practical, however, it can mask the true value of a travel management solution when you concentrate on the factors that many TMCs can change later, e.g. fees. You also need to understand which factors are the most important to you, your management and your travellers.
- Decision-makers Who needs to be involved in the decision-making process? Bookers, finance, procurement, travel, HR, IT? Are they all located in the same office? Do they want to be actively involved in an RFP process or just have input on areas relevant to them or the final decision? Co-ordinating internal meetings can sometimes lengthen the process if the right people are not involved. Get a better understanding of who is ‘important’ before you start the process.
- Cost and time It’s important to separate the cost of change (e.g. implementation process) itself from the time and cost directly attributable to an RFP process, (e.g. the RFI (request for information), scoring and due diligence, interviewing the final three and the decision-making panel). Another consideration is whether you choose to conduct this using electronic tools or whether to do it yourself.
The process is so demanding that many companies now delegate the task to consultants whose cost should also be a consideration.
An RFP can be costly and time-consuming. Once you’ve done your research it’s worth thinking about whether a formal process is necessary or whether individual meetings and presentations can deliver the result you want.
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