Module-c community Based Financial Management

2. Costs 
consist of: 
 All expenses/items that the WUA will need to spend money on during 
the year in order to carry out its normal business. 
 These include cost of fuel for the pump, cost of spare parts, 
workman
’s fees, office rent, committee allowances, unexpected 
breakdowns, etc. 
Step - 1: Visioning 
and Financial 
Sustainability
Discuss the project vision in terms of the water service and its financial 
sustainability. 
1. Ask participants what they think the project should provide in the way of 
a service in terms of: 
(i) Water quantity 
– how much water does each household expect from 
the project (this figure should be reasonable, based on the source and 
infrastructure, not a wild guess); 
(ii) Water quality 
– treated water, raw water, etc 
(iii) Reliability 
– high reliability means that the project should have extra 

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Ministry of Water, Irrigation and Electricity 
 Operation and Maintenance Management Manual 
Training Module - D 
Community Based Financial 
Management 
 
DEMEWOZ CONSULTANCY 
14
MODULE 
– D
 
FINANCIAL MANAGEMENT FOR RURAL WATER SUPPLY 
SCHEMES 
financial, material and staff reserves 
2. Discuss the link between the quality of the service and the cost of the 
service; 
3. Ask participants whether the project should be self-reliant on funds from 
revenues. Should revenues cover operational costs (partial cost 
recovery) only or also capital replacement costs (full cost recovery)?
Discuss the meaning of these terms. 
4. If the project members think that the vision is to provide very cheap or 
free unlimited water, then further discussion is required before any 
discussion on tariffs; 
5. What is the vision of the project in terms of its financial sustainability? 
Discuss the fact that a vision is something that you strive to achieve 
– it 
may not be realized immediately but decision making should be 
directed towards realizing this vision.