Module-c community Based Financial Management

SCHEMES 
Objective
By the end of the session participants should be able to: 
1. Explain the importance of an annual budget; 
2. Prepare an annual budget and keep it up to date; 
3. Evaluate the financial performance of the WASHCO 
Outputs
 Raised awareness on the value of budgets; 
 Ability to prepare an annual budget as demonstrated by drafting a 
sample annual budget for an organization. 
Timing
Approximately 2 hours 
Target Group  
WASHCOs/ WBs 
 
Methodology 
 
 Demonstration/observation 
 Illustrations in practice 
 Group work 
 Short presentations/question and answer 
 
Practical exercise on budgeting
Materials 
 WUA books of accounts 
 Illustrations; 
 Flip Charts and marker pens; 
 Pens (different colors), note books; 
 Sample WASHCO budget statements; 
 WASHCO By-Law 
Session Guide 
Support 
Information
The following terminology need to be explained: 
Term 
Definition 
Budget 
A summary of the expected income and expenditure 
associated with a particular activity. 
Fixed Cost 
These are costs that are not related to how much water 
the WASHCO produces 
Recurrent cost These are costs that are dependent to how much water 
the WASHCO produces. 

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Ministry of Water, Irrigation and Electricity 
 Operation and Maintenance Management Manual 
Training Module - D 
Community Based Financial 
Management 
 
DEMEWOZ CONSULTANCY 
13
MODULE 
– D
 
FINANCIAL MANAGEMENT FOR RURAL WATER SUPPLY 
SCHEMES 
Variable cost 
Same as recurrent cost 
Operating 
Cost 
Costs incurred in the operation of the WASHCO 
Revenue 
Income to the WASHCO 
Capital Cost 
Cost incurred for something that has a life span that 
extends over several years 
Operating 
Balance 
Revenue less operating costs (fixed and recurrent costs) 
Operating 
Ratio 
Revenue divided by operating costs. 
Capital 
replacement 
Describes a situation in which the revenues are sufficient 
to cover costs of replacing the assets 
A budget has two major components 
– revenue (income), and expenditure – 
fixed costs and recurrent costs: 
1. Revenues 
consists of: 
 Money expected to come in during the year from joint venture 
payments, workshop incomes, tree seedlings sales, payments of the 
water bills, and any other revenues.