RFI, RFP, SOW, MSA, Contract – What’s the Difference?

You may have recently been promoted to take on more project management responsibilities
and you are eager to do your part. Or, you are still contemplating a career that involves
project management, and you are now looking to find out more details about what is
involved.
Because your experience in project management is still somewhat limited, there are some
terms that you have heard of but have now realized you are not quite sure of how they are
different from one another. In particular, you are curious about such words as RFI, RFP,
SOW, MSA and contract. Read on to become more familiar with these key documents before
you report to the next jobsite.
RFI
Receiving a Request for Information will often be the first way you learn about the
organization that you might soon be contracting with to do work. The RFI is used to explore
options before creating a contract for the project. A company or other organization will issue
an RFI to gain information about which businesses are best suited to take on the job, as well
as meet internal requirements for competitive bidding on all jobs. This is your time to shine.
The existence of an RFI should indicate that the bidding process will be fair to all companies
that want to throw their hat into the ring. Examine the RFI carefully to determine if your
company can meet its objectives within budget.
RFP
A Request for Proposal is a document that is used to obtain comprehensive proposals from
capable and interested companies, to demonstrate their skills, experience and knowledge will
enable them to take on the described project. You will often receive an RFP after reading the
advanced details in the RFI. It’s important to take your time and do your due diligence when
developing an RFI, which will include budget details, timing of work and a thorough
description of the project scope. All requirements of the project will be addressed, with you
showing the specific steps or solutions you will follow from day one to completion.
SOW
The Statement of Work is a document that the companies will use to describe what will be
happening during the project. For example, the SOW should indicate all items that will be
delivered, the timeline or timelines involved and when invoicing will take place. You are
spelling out everything that will be done, and the terms may be done for a fixed cost or on the
basis of the materials and time expended, subject to negotiations, of course. The SOW
declares what expectations and underlying assumptions are associated with the project. Your
organization will be legally obligated to deliver what you agreed to in the SOW’s terms when
it comes time to formalize the contract.
MSA
A Master Services Agreement or MSA serves to define how your company and the other
company will work together. One key element of this document will be the terms of payment.
The decisions you make on payments timing and amounts will naturally involve your CFO
and accounting department, such as whether it would be best to offer a discounted rate to win
a particular job or whether your revenue cycle is strong enough to withstand later payment
terms that you would otherwise object to.
Contract
A contract is the final document that you’ve been working toward so you can begin efforts on
the new project. The contract will take into account the various details as specified in the
original request for information and may very well be adjusted in a number of ways, based on
the parameters that you went through when developing the request for proposal. A contract
serves as a legal agreement that your organization and the other party sign. The contract will
specify payments and timing of work to be done, as well as any reporting requirements and
the duties of the contracting parties.
Expanding your knowledge and skills to move ahead in your career is not a task to take
lightly, but it will definitely set you apart from others as you take on more responsibilities in
managing projects for your company.
In fact, when it comes to project management, while it will take some time to learn the ropes,
you can feel confident that with experience will come greater confidence and the ability to
sort out the contract’s needs and requirements in keeping with what your team can deliver.
Becoming more familiar with terms such as RFI, RFP, SOW, MSA and how they are
different from one another will prepare you to work out the terms of a contract for your next
project.