Impact case study – "Dialogic Evaluation" of Public Private Partnerships
Public expenditure will always be under scrutiny. However, it can be challenging for national audit offices to judge value-for-money in complex long-term funding arrangements between private companies and the state.
King’s College London worked with the UK’s National Audit Office (NAO) and Australia’s Victorian Auditor-General’s Officer (VAGO) to find a model that solved these problems.
In response, Professor Laughlin and Professor Broadbent developed their innovative “dialogic evaluation” model. This evaluates spending in Performance Audits by moving auditors away from a more reactive ‘watchdog’ approach to spending.
The complex nature of PPPs
Performance Audits involve national audit offices making judgements on the value-for-money on public expenditure. These are particularly complex in the cases of Public Private Partnerships (or Private Finance Initiative in the UK) due to lengthy contracts, which can last over 25 years.
The sums in question are vast. In the UK alone, by 2007, more than 870 projects worth £65.5bn had been procured as PPPs.
Lack of government guidance
Extensive contract negotiations at the pre-decision stage between procurers and suppliers are unique to PPPs. And the government provides plenty of guidance on how to construct long-term contracts. This gives audit offices the framework they need to undertake performance audits of the pre-decision and decision stages. But there is limited advice on the best way to undertake Performance Audits in the operational stage.
Developing a research-based model
Professor Richard Laughlin from King’s and Professor Jane Broadbent from Royal Holloway worked together to develop the innovative “dialogic evaluation” model for judging value-for-money.
The model doesn’t view value-for-money as an objective, scientific pre-given. Instead it is seen as a structured dialogue between key experts and stakeholders. This is known as “dialogic evaluation”.
Applying the model to real world challenges
In Australia, Victorian Auditor-General’s Office (VAGO) needed to resolve the challenges they faced as a national agency evaluating spending.
They applied the “dialogic evaluation” model developed by Laughlin and Broadbent and found it had a direct impact on their Performance Audits.
Recognising its positive influence, VAGO referred the research to other states in Australia to help them evaluate PPPs over longer contracts.
....your work went beyond the scope of that Prisons audit, and has stimulated us to think differently about what is and what is not feasible in these evaluations.
Jacquie Stepanoff, Manager – Policy and Co-ordination, VAGO
New Performance Audit guidelines
In the UK, Performance Audits had been an on-going issue for the NAO. After Laughlin and Broadbent presented their research, the NAO embraced “dialogic evaluation” and produced new Performance Audit guidelines that reshaped the practice of Performance Audits on Public-Private Partnerships.
Laughlin and Broadbent’s research and model has provided the framework necessary to move away from the reactive “watchdog” approach to value-for-money audits.
Ultimately, the model has provided a way of thinking, as well as an effective design for Performance Audits, filling a conceptual and practical gap.