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Swiss Challenge Method and Modified Swiss Challenge Method: Meaning, Examples and Key Differences

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Introduction

The construction of infrastructure is crucial to a country’s economic growth and development. However, creating infrastructure projects involves tremendous investment, skill, and resources, which governments may not always have. The Modified Swiss Challenge Method (MSCM) has developed as a popular alternative to standard procurement procedures in such instances. However, before we go into what is Modified Swiss Challenge Method, let us first define what is Swiss challenge method.

What is the Swiss Challenge Method?

The Swiss Challenge method is a procurement method that incorporates a competitive bidding procedure in which a government or private organization invites private sector bidders to submit bids for a project. However, unlike standard bidding processes, the Swiss Challenge system incorporates a challenger, who is a private sector organization that presents an unsolicited proposal to the government. The government then allows additional private sector bidders to submit competing offers, and the initially selected challenger has the option to match or surpass the best offer.

Example of Swiss Challenge Method in Practice

The Mactan-Cebu International Airport Project in the Philippines is an example of the Swiss Challenge approach in action. The GMR-Megawide partnership submitted an unsolicited proposal to the Philippine government in 2012 to renovate and extend the Mactan-Cebu International Airport. Following that, the government encouraged other bidders to submit competing offers, and the GMR-Megawide consortium was given the option to equal or surpass the highest offer. The GMR-Megawide partnership eventually won the competition and was granted the contract.

What is the Modified Swiss Challenge Method (MSCM)?

The Modified Swiss Challenge system (MSCM) is a government procurement system that permits private enterprises to propose and construct infrastructure projects on the government’s behalf. A government agency invites private enterprises to submit ideas for an infrastructure project through an MSCM. The plans are then published by the government, and other corporations are invited to make counter-proposals that improve on the initial proposal. The original proponent is given a chance to match or outperform the counter-proposal. If the original proposer matches the counter-proposal, the project is won. If it does not, the project is granted to the counter-proponent.

Example of Modified Swiss Challenge Method in Practice

The Delhi-Mumbai Industrial Corridor (DMIC) Project in India is an example of the Modified Swiss Challenge approach in action. The DMIC creation Corporation (DDC) submitted an unsolicited proposal to the government of India in 2010 to build the DMIC project, which included the creation of a dedicated goods corridor and industrial infrastructure along the Delhi-Mumbai corridor. After that, the government encouraged additional bidders to submit competing offers, and the DDC was granted the authority to match or surpass the highest offer. After presenting a better bid, the DDC was eventually given the contract.

How Does the Modified Swiss Challenge Method (MSCM) Work?

The MSCM follows a three-stage process:

Stage 1: Submission of Unsolicited Proposal

A private company submits an unsolicited proposal for an infrastructure project to a government agency. The government agency reviews the proposal to determine if it meets its needs.

Stage 2: Publication of Proposal and Invitation for Counter-Proposals

If the government agency determines that the proposal meets its needs, it publishes the proposal and invites other private companies to submit counter-proposals that improve on the original proposal.

Stage 3: Evaluation and Award of Project

The government agency evaluates the original proposal and all counter-proposals. The original proponent is given an opportunity to match or better the counter-proposal with the best value for money. If the original proponent matches the counter-proposal, it wins the project. However, if it fails to do so, the project is awarded to the counter-proponent with the best value for money.

Advantages of the Modified Swiss Challenge Method

Increased competition

The Modified Swiss Challenge method promotes competition among private sector bidders, leading to better quality and more cost-effective solutions.

Innovation

Since the challenger must submit an unsolicited proposal, the Modified Swiss Challenge method encourages innovation and creativity in project design.

Flexibility

The Modified Swiss Challenge method allows for more flexibility in the procurement process, as the original challenger can submit an improved proposal.

Transparency

The Modified Swiss Challenge method promotes transparency and accountability in the procurement process, as all proposals are evaluated based on objective criteria.

Now let us look at some of the difference between Swiss challenge and modified Swiss challenge method:

Key Differences Between Swiss Challenge Method and Modified Swiss Challenge Method

Original Challenger Participation

The Modified Swiss Challenge method allows the original challenger to participate in the bidding process, while the Swiss Challenge method does not.

Flexibility

The Modified Swiss Challenge method allows for more flexibility in the procurement process, as the original challenger can submit an improved proposal, while the Swiss Challenge method does not allow for this.

Transparency

Both methods promote transparency in the procurement process, but the Modified Swiss Challenge method may be more transparent as it allows the original challenger to participate in the bidding process and can submit an improved proposal that is evaluated based on objective criteria.

Conclusion

The Modified Swiss Challenge Method (MSCM) is a novel method to infrastructure construction that encourages competition, innovation, and quicker project completion. Governments may lower their financial risk while delivering infrastructure projects faster and more effectively by shifting project development risk to private enterprises. Several countries have successfully adopted the MSCM. The Modified Swiss Challenge technique is a contract management procurement strategy that encourages competition, creativity, flexibility, and transparency. It has grown in prominence in recent years, particularly in developing nations where government procurement must be transparent and accountable.

Also read: Logistics Performance Index: Its Significance & Limitations

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Shantanu Trivedi
Shantanu Trivedi
Shantanu Trivedi is working as a faculty at the University of Petroleum and Energy Studies, Dehradun. He holds an MBA and a Ph.D. degree in Supply chain management. He has more than a decade of experience in teaching and research. He has published 2 books, 5 book chapters and more than 12 research papers and articles in international journals of repute. His research interest includes Supply chain management, agribusiness, online and distance education, Business sustainability and infrastructure management. He is the reviewer of many international publishing houses. He has presented his work and won awards at many research conferences and symposiums. He has worked on many research with state governments and the government of India. In his spare time, Shantanu loves to travel and explore nature.
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