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Water for People's Kim Lemme examines a new Excel-based cost analysis tool.
During a Google hangout on new cost analysis tools, Kim Lemme, the Senior Manager of the Finance and Compliance Programme at Water for People, looked at the AtWhatCost tool: an Excel-based tool that works out life-cycle costs and revenue. Here she outlines her thoughts.
My husband and I are in the midst of a common issue in our North Denver neighborhood. We love our neighbors, love our neighborhood, but we could use just a bit more living space as our kids get older. As we consider an extension to the house, the conversation often stops at "how much is this going to cost us"? We don't yet know that answer, as we haven't yet run the numbers.
Until there is a good understanding of what you are hoping to pay for with tariff collections, you have no idea if the tariff is set at an appropriate level.
Just as we must run the numbers in considering a home addition, it is hard to understand the most effective long-term management approach for any water system until the true costs are clearly understood and analysed. Setting tariffs is a great idea; collecting them is even better. But, really, until there is a good understanding of what you are hoping to pay for with those tariff collections, you have no idea if the tariff is set at an appropriate level. Districts and stakeholders of any water system simply need to do what we need to do next with our home addition – run the numbers.
With the support of a World Water Corps volunteer, Water For People developed a tool we call AtWhatCost. It is an Excel-based tool that allows for inputs (population size, tariff paid, percentage of people paying the tariff, cost of materials, schedule of anticipated minor and major repairs) based on a specific technology (gravity-fed scheme, Afridev handpump, Mark II handpump, piped scheme). As you complete those inputs, you are able to immediately see the anticipated revenue and expenses over time for that specific system. For example, an Afridev handpump serves a village of 50 families in rural Chikhwawa, Malawi. Given the assumptions in the model, the village water committee or district water officer is able to see at a glance the financial viability and long-term sustainability of that handpump. Change a few of the inputs (an increased tariff, for example) and the graph immediately reflects those changes.
Based on the inputs in a few tabs in the AtWhatCost model, the above graphs are generated on the last tab of the model. In the case of this model above, the user can visually see the inputs are such that the cash flowing at this water point is sufficient to pay for ongoing maintenance and operation, as well as major repair in 2026. Other models don't always paint such a rosy picture – incentivizing the stakeholders to make changes.
Water For People field offices have just begun using this model and will continue working to build out models for the various districts and communities in which we are working. But one thing is clear. The AtWhatCost tool arms them with the knowledge needed to advocate for the real meaning of Forever – at least from a financial perspective. Until you know the expenses, and until you know the revenue, it is hard to determine long-term financial sustainability of any water point. It is simple. Run the numbers. Do the math.
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