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Tools » Delivering services » Finance » Costing and Budgeting Tools

Please note: this is a beta-version of the Costing and Budgeting Tools; these tools are currently being tested in several countries. We invite you to use the tools and send us your feedback. Contact us in case you have any questions or suggestions via training@ircwash.org

The tools have been developed by IRC, Water for People and Aguaconsult. They build on Water for People’s “Everyone Forever” programme and IRC’s work on life-cycle costing and financing of sustainable water and sanitation services. Have a look at IRC’s costing and finance webpage for more information.

Why these tools?

This set of tools is developed to support district authorities in planning and budgeting for sustainable water services in their district or municipality. To provide sustainable water services for the entire population in districts, it is important that all costs related to service delivery are taken into account. This includes costs for implementation of infrastructure, costs for operation and maintenance, costs related to administration and costs to replace the infrastructure. All these costs need to be financed. And the finances need to be planned. These tools help you to analyse costs related to each category and create a financial overview for your district.

  • The Asset Registry Assessment Tool helps you to plan for rehabilitation and other capital maintenance expenditure, based on the data you enter on the state of the infrastructure in your district. It tells you which water systems are at risk and which components you should consider replacing or maintaining.
  • The Cash Flow Analysis Tool can be used to analyse cash flows of service providers. This tool helps you to create an overview of your income and expenditure for the coming years and to analyse if you have enough resources to cover your costs and, if not, which elements in your planning you should adapt.
  • With the Direct Support Cost Tool you can calculate i) the actual direct support expenditure per person, ii) the required direct support costs per person, and iii) the gap between the actual and required direct support expenditure per person in your district. 
  • With the Financial Overview Tool you can create an overview of your revenue and expenditure at the service authority level (i.e. district as a whole). You can calculate the gap between actual and required revenue and expenditure and analyse the various expenditure components and revenue streams.

Who can use these tools?

These tools can be used by anyone interested in planning and budgeting for sustainable water services at the district level. The set of tools is specifically designed for (service) authorities at the district level or organisations supporting these authorities. One of the tools (Cash flow analysis tool) is specifically designed for service providers.

How to use the tools?

The tools have been designed in such a way that each tool can be used separately. The navigation buttons allow you to easily browse through all the tools. Each tool has an instruction page and provides links to websites with more background information. This tool is pre-populated with some data so you can quickly see how it works. Scroll through the sheets to get acquainted with the potential of the tool. Don’t forget to delete the data that is there once you start entering your own data.

The tools are developed in Excel, as this is the software most commonly understood and in use among municipal officers. The names and functions in each of the tools (in grey cells) can be edited to tailor the tool to the local context. The tool is set in "full screen" mode. You can change this by double-clicking on the tool. Under the "view" option you can then also choose to show headings, formula bars etc.

The sheets are locked to protect the formula in the sheets. If you want to unlock the sheets to view or change the formula, you can do that by going to File > Info > and then click on "Unprotect" for the sheet you want to unlock. The password for unlocking sheets is "cbt16".

Conceptual background

The set of tools is based on two key conceptual frameworks: 1) life-cycle costs and 2) infrastructure asset management.

1) Life-cycle costs refer to all the costs that are incurred in the various phases in the life-cycle of a water services; from the implementation of the infrastructure, to its operation and maintenance, and eventual replacement. If certain costs are left out, this is sooner or later reflected in a reduced level of service and poor sustainability. The different cost-components we take into account in costing water and sanitation services are:

  • Capital expenditurehardware and software (CapEx): the initial investment in the development of a water or sanitation system, referring to both the investment costs into infrastructure as well as costs related to the mobilisation of the community.
  • Operating and minor maintenance expenditure (OpEx): recurrent (regular, ongoing) expenditure on labour (salary for staff), costs for management (transport, fuel), energy and chemicals, materials, and minor repairs of the infrastructure.
  • Capital maintenance expenditure (CapManEx): expenditure on asset renewal, replacement and rehabilitation of the infrastructure.
  • Expenditure on direct support (ExpDS): expenditure on both pre- and post-construction support activities directed to local-level stakeholders, users or user groups.

The other two cost categories – expenditure on indirect support and cost of capital – are not further explained here, as they are normally assumed at national level, and therefore not considered in these tools. Click here for more information about the life-cycle cost approach.

2) Infrastructure asset management is an approach to optimise the costs of installing and maintaining infrastructure so that it keeps on providing an adequate service level. This implies: i) maintaining an up-to-date register of all assets in an area; ii) defining the service levels to be provided, and iii) understanding how assets fail (e.g. a slow deterioration or sudden failure). Based on this, one can make a projection of when and how to replace certain assets. Combining this information with life-cycle cost data allows then projecting at which moments in time replacements of rehabilitations need to happen and what that would cost.

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