Lots of projects start with a loose idea or frustration. At that point, you most likely have no idea yet what the solution will cost. You might think this problem solves itself once you get some offers in. At the end of the day, each offer will come with a number. You'll be able to pick the correct one based on your careful quality versus cost analysis. Unfortunately, you might be in for a huge disappointment. And that's simply because most of us don’t have an unlimited budget. When writing up all your requirements, it does not cost you anything more than the time you spend on writing it. However, implementing that requirement will cost a whole lot more. To know your budget, you need to know your requirements. But to write down your requirements, it’s also nice to have a budget in mind… So yes, chicken or eggs kind of situation.
💡 Tip: Make a business case
Luckily there are some strategies you could employ to avoid ‘the unknown budget’-issue. If you make a business case for your project, you should be able to determine what you can spend and how much budget you need.
💡 Tip: Get a ballpark figure
Pitch your project to someone from the industry, preferably multiple people. They might be a bit reluctant to give you a number, but most should be able to give you a broad range of the budget for such kind of project. Most of the time they'll ask some extra questions. Make notes! They'll ask about things that have the most impact on your budget. A classic is: “Are there any integrations?” or “Where is this data coming from?”. This will help you determine what to ask for in your RFP and gard you for the infamous “Phase 2”.
💡 Tip: Share your budget
Write your maximum budget down in your RFP. It will save you a lot of time reading submissions that are 10 times your budget. But it also allows the vendors to think of solutions that will fit your budget. Won’t it make the offers more expensive? Nope. If you have a 500K budget and a vendor thinks he can do it for 200K, they are going to send you one for 200K. And that’s simply because of competition: if one vendor can make it for 200K, their competitors most likely can do the same. So they won’t take the risk of being too expensive.