Page 75 - Urban water supply handbook

STRATEGIC PLANNING FRAMEWORK FOR SMALL WATER SYSTEMS

2.8 HISTORY, PLANNING, OUTSOURCING

fessional organizations, grant and loan programs to build financial capacity, part-
nerships and alliances with other utilities, techniques for improving operational
efficiency, integrated-resource management, and technological innovation.
Planners should strive to identify the broadest range of opportunities available to
the water system for enhancing the achievement of its mission and goals.

2.3.4 Step 4: Evaluate System Capacity

A critical evaluation of the utility’s internal capacity plays a key role in effective
strategic planning. Likewise, strategic planning is a basic and essential tool for
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capacity development. Water system capacity is defined in terms of three interre-
lated elements: technical, financial, and managerial. Each element of capacity is
necessary but not sufficient by itself to sustain the water system over time. The
numerous tools used in capacity assessment and development can be readily
adapted to the strategic planning process. Table 2.2 provides an overview of
capacity-development concepts.
Technical capacity is defined in terms of three areas: source-water adequacy,
infrastructure adequacy, and operations and maintenance. The water system will
need to create and maintain a detailed inventory of the physical infrastructure used
to deliver drinking water, organized according to functional areas: source-water
development, water treatment, treated water storage, and transmission and distri-
bution. Facilities used for general administration and retail service should also be
assessed. The inventory and plan should include an appraisal of physical condi-
tions, as well as a review of operation and maintenance practices.
Financial capacity is defined in terms of revenue sufficiency, creditworthiness,
and fiscal management and controls. Revenue sufficiency or financial sustainabil-
ity generally requires systems to implement cost-based rates for water service.
Creditworthiness indicates that the system can fund capital improvements through
appropriate financial markets. Fiscal management and controls ensure that rev-
enues and costs are accounted for through generally accepted procedures.
Managerial capacity is defined in terms of ownership accountability, staffing
and organization, and external linkages. Water system owners must be identifiable
and accountable. The staffing and organization of the utility must be appropriate
to the system’s mission and goals, as well as the challenges it must meet. The con-
cept of external linkages refers to the ability of the water system to interact effec-
tively with all relevant stakeholders, including customers and regulators.
Strategic planning can enhance all three areas of capacity. For each element of
capacity, the planners should make a broad assessment across the utility to iden-
tify strengths and weaknesses in each of the elements of capacity. Strengths are
performance-enhancing factors; weaknesses are performance-limiting factors.
The assessment should consider strengths and weaknesses in light of anticipated
challenges and opportunities for the water system identified in the previous plan-

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