How much design do you need before seeking quotes? Balancing definition, innovation and schedule

A business planning a new piece of equipment, a fit-out, a product component or a building faces a timing question: when is the design ready to send to suppliers for quotes? Ask too early and suppliers have to guess at missing information. They add risk margins, qualify their offers with long lists of assumptions and price different interpretations, so the quotes cannot be compared and the arguments start after the order is placed. Ask too late and you may lose time, miss supplier ideas that would have improved the design and lock in your own preferred solution when a better one existed.

The answer is not “when the design is finished”. Some purchases need a complete design. Others are better served by describing the outcome and inviting suppliers to propose solutions. The right level of definition depends on what you are asking the supplier to do.

This article explains the difference between concept and detailed design, why technical detail is not the same as commercial clarity, how to choose between prescriptive and performance-based requests, and five tests to apply before you go to market.

Concept design and detailed design

• Concept design describes the proposed solution at a high level: what it is, roughly how it works, its main components, its approximate size and an early cost estimate.
• Detailed design develops the solution into drawings, specifications, calculations and estimates detailed enough to build or manufacture from.

Procurement can sensibly start at different points between the two, depending on the commercial model you choose.

What happens when you go too early or too late

Technical detail is not commercial clarity

It is possible to send a hundred drawings to suppliers and still leave the important questions unanswered: who is responsible for what, where the boundaries between packages sit, which standards apply, how the result will be tested and what happens if something does not work. A shorter document that answers those questions clearly can produce better quotes than a thick drawing set that does not.

Design readiness should therefore be judged against the commercial decision you are asking the supplier to make:

• If you want suppliers to quote a fixed price to make exactly what you have specified, the specification must be complete and unambiguous.
• If you want suppliers to propose a solution to meet a performance requirement, the requirement must be clear and measurable, but the technical solution need not be.

Prescriptive or performance-based?

A prescriptive specification describes the solution: the configuration, components, materials and methods. A performance specification describes the outcome: what the solution must achieve, under what conditions and how it will be tested.

Consider a plant that needs to increase packing throughput by 20%. A prescriptive request specifies a particular conveyor layout, drive arrangement and control system. A performance request specifies the required throughput, product characteristics, safety requirements, interfaces with existing equipment and the acceptance tests.

Neither is automatically better. The right choice depends on your engineering capability, risk tolerance, the market’s expertise and how important standardisation is to you. Many requests mix the two: prescribing the non-negotiable elements and leaving the rest to suppliers.

Five tests before going to market

Before sending a request for quotation or tender, check five things.

1. Outcome

Is the required performance clear and measurable? “Faster packing” is not a requirement. “At least 40 cartons per minute of the product range listed, with no more than 0.5% rejects due to mis-labelling” is.

2. Interfaces

Are the physical, electrical, data and organisational boundaries understood? Where does the supplier’s scope start and stop? What existing equipment, buildings and systems must the solution connect with?

3. Constraints

Which standards, safety, environmental, site and operational conditions are non-negotiable? Space, power, noise, hygiene requirements, operating hours and maintenance access are common examples.

4. Freedom

Where do you want suppliers to innovate, and where must they follow your design? Be explicit, so preferences are not mistaken for mandatory requirements, or mandatory requirements for preferences.

5. Acceptance

Can you objectively determine whether the delivered solution works? Define the tests, conditions and pass criteria before you seek quotes.

If these five are clear, you may be ready to go to market even if some design details are not fixed.

A worked example

This is an illustration. A small bakery wants to automate part of its bread slicing and bagging. The owner’s first instinct is to wait until an engineer has designed the whole line in detail, which would take three months and cost several thousand dollars.

Instead, the owner applies the five tests:

• Outcome: slice and bag 1,200 loaves an hour across four loaf sizes, with consistent slice thickness and sealed bags.
• Interfaces: the line must receive loaves from the existing cooling racks and deliver bagged loaves to the current crate packing area, use the existing three-phase supply and fit within a marked floor area.
• Constraints: food-safe materials, easy cleaning, guarding meeting machine safety requirements, operation by one person, noise below a stated level.
• Freedom: suppliers may propose any slicer and bagger combination and layout that meets the requirements.
• Acceptance: a two-hour production test at rated speed with each loaf size, measuring throughput, slice consistency, bag seal quality and downtime.

The owner sends this performance request to three equipment suppliers, who visit the site. Their proposals differ: one uses a single combined machine, another two separate machines, and a third proposes a semi-automatic option at lower cost. The owner pays an independent engineer for two days to compare them against the requirements and check the safety and hygiene features. The chosen supplier is responsible for meeting the acceptance test. The project starts two months earlier than the detailed-design route would have allowed, and the chosen solution is one the owner had not considered.

Early supplier involvement

Sometimes the best approach is to talk to suppliers before the requirement is final. Early supplier involvement can reveal what is technically possible, what drives cost and lead time, and which design choices make manufacture or installation easier. It works best when:

• You treat early conversations as research, not commitments.
• You are fair to all potential suppliers, sharing the same information with each where you plan a competitive process.
• You still define the outcome yourself. Supplier expertise cannot replace a buyer who knows what success looks like.

Writing a request that works

Whatever level of design you have reached, a clear request for quotation (RFQ) improves the quality and comparability of responses. A practical structure:

1. Background: what the business does and why this purchase is needed.
2. Scope: what is included and, just as importantly, what is excluded.
3. Requirements: performance requirements, plus any prescribed elements, clearly labelled as mandatory or preferred.
4. Site and interface information: drawings, photos, services, access, operating hours and existing equipment.
5. Constraints: standards, safety, hygiene, environmental and regulatory requirements.
6. Acceptance: tests, conditions and pass criteria.
7. Commercial terms: pricing format, payment terms, warranty, delivery and installation responsibilities.
8. Response format: what suppliers must include, such as a description of the solution, compliance against each requirement, assumptions, exclusions, lead times and references.
9. Evaluation: how responses will be assessed, beyond price.
10. Questions and site visits: how suppliers can ask questions, with answers shared fairly with all.

Asking suppliers to state compliance against each requirement, and to list every assumption and exclusion, makes it much easier to see what you are really being offered.

Comparing quotes that propose different solutions

Performance-based requests produce different solutions at different prices, which makes comparison harder than lining up prices for the same design. A simple evaluation matrix helps:

Score each supplier against the criteria, eliminate any that fail mandatory requirements, and compare weighted scores alongside price. Write down why you chose the winning offer. If proposals contain qualifications that change what is offered, clarify them before deciding.

Signals that the request was not ready

• Suppliers ask many basic questions about scope and interfaces.
• Responses contain long lists of assumptions and exclusions.
• Prices vary enormously, suggesting different interpretations.
• Suppliers propose solutions to problems you did not mean to describe.
• Significant redesign is needed soon after award.

When these appear, pause, clarify the requirement and reissue it, rather than choosing between incomparable offers.

Who owns the remaining design decisions?

A useful question before going to market is not only “how complete is the design?” but “who will own the remaining design decisions after award?” The answer should match the specification, the evaluation criteria and the contract. Problems arise when the models are mixed: prescribing critical details while expecting the supplier to carry full performance responsibility, or inviting innovation while keeping approval processes that control every design decision. The article on design first or design and build explores that allocation in more depth.

How this applies to a small Australian business

Small businesses often lack in-house engineering, so the temptation is either to go to market with a vague idea or to pay for a full design before speaking to anyone. A middle path usually works better:

• Write a short, clear requirements document using the five tests.
• Talk to two or three suppliers early to learn what is possible and what drives cost.
• Decide what you will prescribe and where suppliers may propose alternatives.
• Define acceptance tests before asking for prices.
• Use an independent adviser for a few days to review the requirements and evaluate proposals, rather than paying for a full design you may not need.
• Classify your purchases: build-to-print for simple, standard items, performance-based for specialised or integrated systems.

Long-lead items

Some items take months to manufacture or deliver: large motors, transformers, switchgear, specialised machines and custom components. Waiting for the full design before ordering them can delay the whole project. Where a long-lead item’s key parameters are known early, consider seeking quotes and placing orders for it ahead of the rest of the design, provided its interfaces are fixed and later design decisions will not change it. Record clearly which parameters are frozen so that the rest of the design works around them. Check cancellation and change terms before ordering early, so that if the design does move, you understand what it would cost to modify or cancel the order. Early ordering protects the schedule only if the frozen parameters genuinely stay frozen. Where the parameters are still uncertain, a reservation of manufacturing capacity or a deposit to secure a production slot can sometimes protect the schedule without committing to the full specification.

Common mistakes

• Waiting until every detail is fixed when a performance request would work better.
• Going to market with no clear outcome, hoping suppliers will define it.
• Confusing volume of drawings with commercial clarity.
• Encoding preferences as mandatory requirements, shutting out good alternatives.
• Omitting interfaces and acceptance tests.
• Treating design readiness as purely an engineering decision, when it affects price, competition, risk and schedule.
• Mixing prescriptive detail with performance responsibility in the same contract.

Questions to ask

• What must be fixed before we approach suppliers, and what can they propose?
• Is the required outcome clear and measurable?
• Are the interfaces clearer than the internal design details?
• Can suppliers price the remaining uncertainty sensibly?
• How will we judge whether the delivered solution works?
• What do we gain in time by going to market now, and what risk do we create?
• Who will own the remaining design decisions after award?

Bringing it together

Design readiness is not a percentage-complete question. It is a judgement about whether you have defined enough of the right things for suppliers to compete, price and perform responsibly. Decide what you are asking suppliers to do: build to a fixed design, or propose a solution to a performance requirement. Then test the outcome, interfaces, constraints, freedom and acceptance before going to market. Talk to suppliers early where their expertise helps, define acceptance tests before asking for prices and make sure the contract matches who owns the remaining design decisions. Sufficient definition for the commercial model you choose, not maximum detail, is the goal.

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Source: KEVOS notes. Examples in this article are illustrations. This article is general information, not legal advice.