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Published on: 13/06/2014

Participants from academia, NGOs, utilities, private businesses and start-ups joined the discussion at the venue 7AM in The Hague. Patrick Moriarty, CEO of IRC opened the event and Erma Uytewaal moderated the discussion.

Asset management & the life-cycle cost approach
Catarina Fonseca from IRC set the context of the discussion and touched upon some examples of whole small town water systems that stop working. It makes her, and other people in the sector, wonder about sustainability. A short animation is shown that explains the life-cycle cost approach as the foundation for better finance and investment for services. Costing data needs to be included in planning and budgeting processes, to help diversify investment to support the full life-cycle cost of a service, not just the capital expenditure costs of installing infrastructure. Once equipment for water and sanitation is installed, it will need to be maintained over time. Catarina explained why capital maintenance is critical for sustainability and how asset management is an integral component required to handle the cost peaks associated with large maintenance in managing rural water assets in low income countries.

Water for Good asset management for rural water supply in Central Africa Republic
Jon Allen of Water for Good took us to the reality on the ground in the Central Africa Republic (CAR). With a poor agricultural based economy, CAR hardly has a banking system or infrastructure. Most areas are remote and rural to the point that there's no mobile phone network available in many places. The lack of supply and materials and the inaccessibility of roads make WASH services very expensive. On top of that, the country has recently witnessed the outbreak of a civil war, which transformed the Bangui airport into a refugee camp. Suddenly, Water for Good is operating in a conflict zone.

Asset management is part of how Water for Good operates. Allen explained: "It went naturally. When the operation grew in the country we wanted to focus on expenditure, costs and effectiveness. We wanted to do materials management, since no one knew exactly when to order new parts." So they started to gather asset and financial information from their projects and after that realized what to do. Allen: "The problem was that there was no consistent funding, so no consistent service – and nobody of the local community wants to pay for bad services.

Currently there are four teams on the road for a month, and they cover 80 to 200 hand pumps. Soon as the teams get back, the data that they collected goes into a digital system for monitoring. Visible on the website of Water for Good, there are water points on 960 locations and 86 percent of time the pumps are functioning. The future aim is to be fully funded in-country through private-public partnership. Now with the civil war, Water for Good still relies fully on philanthropy.

Vitens-Evides International asset management in small towns in north Uganda: the relation between investment and operate-maintain
Harold Muller from Vitens-Evides International tried to answer the question: Why is there so much premature failure of water infrastructure? Why are there many installations not working anymore? He explains it in terms of too much focus on coverage, instead of a full cost recovery approach. On top of that there's not enough knowledge on how to maintain and operate systems, and often the needs of the operator is not translated into the right investment. He emphasized that we should include spare parts during the procurement, and support people in understanding how to operate and maintain material. He further advised to include a maintenance scheme and training within the procurement; include the operation costs of the different scenarios of the business case; clarify the investment process; and manage the operate and maintain process.

Ultimately asset management does not start with a tool or detailed procedures, but with the mindset of the service providers.

Can/should rehabilitation programmes be avoided?
Most people believe rehabilitation programmes should be avoided (or reduced). During the discussion, the participants searched for key solutions to ensure better asset management and how and by whom could it be financed. The answer seems to be attitude, skills and scale.

The attitude relates with the mindset towards a longer-term approach. "We need to look at delivering services and the continuous management on the assets that we have invested in." This is partly about the motivation and incentives but also making clear where are the responsibilities towards large maintenance.

The need to invest in people's skills towards maintenance is linked with the attitude and also with using technology that applies to the context and the requirements for maintenance or existence of spare parts network of dealers. Some participants, for instance FairWater, believe that rehabilitation programmes can be done by using reliable technology "in combination with a regional installation and monitoring system, provided by the private sector, so in a profitable way."

Finally, scale is required and density will also impact on the responsibilities towards who is actually doing asset management. Asset management at the level of one or two handpumps or one small system has proven to be very difficult. The service provider should be in principle responsible for asset management within its district but in the end, the ability to make money and recover costs is critical. This drives markets more than anything. Rehabilitation programmes might not be eliminated in some areas because markets can't make money. In these cases, infrastructure fails since no one pays for the maintenance and different agencies will then pay for rehabilitation programmes. Who will finance asset management is less clear. Relying on tariffs is not always enough for coping with unexpected failure. There are some examples where asset management is funded from taxes, but mostly from examples mentioned it has been covered by transfers. Other mechanisms for funding asset management such as insurances are being tried out in Ghana, but for rural areas and small towns this is mostly unchartered territory.

The take-away message of this afternoon is that it's all about changing the mindset. What brings NGOs and other service providers to the life-cycle costs approach is the vision to provide a service that it's good enough for people to want to pay for those services. Rounding up, Patrick Moriarty emphasized that "rehabilitation is bad asset management".

Write-up by Jenda Terpstra based on the discussion at the IRC event on the 3rd June.


IRC runs thematic events in The Hague, open to all interested parties. They aim to bring together professionals to network and discuss hot topics in the water, sanitation and hygiene sector. They are forward looking and multidisciplinary in nature presenting the latest thinking from governments, NGOs, private sector and academia.
Missed it? Join us in September! Register your presence via this email for this event and to be kept informed about future events.
Also read about our earlier events:
Jan 2014 - Death of the hand pump

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