Identifying and quantifying the resources invested in a water

to install the water supply technology, and operate and maintain it during its design lifetime. To help identify the inputs necessary for implementing a particular water supply project, we have drafted a set of questionnaires encompassing all the activities potentially involved in implementing an improved water supply technology.

These costing questionnaires are discussed in section 5.4 and presented in Annex IV, based on the typology of costs discussed in section 5.2 and listed in Annex III. According to this typology, costs are first distinguished depending on whether they are incurred to set up the water supply infrastructure or to maintain and operate the infrastructure during its lifetime. This classification reflects the economic distinction between capital or investment inputs and current inputs. It generates the following basic cost typology, which is reflected in the costing questionnaires in Annex IV:

• investment costs

• maintenance costs

• operational costs

• other recurrent costs

These cost categories are then applied to each type of economic resource invested in the project, to generate the following 18 costing questionnaires:

• investment costs – local materials

• investment costs – imported materials

• investment costs – local equipments

• investment costs – imported equipments

• investment costs – labour

• other investment costs

• incidental investment costs

• maintenance costs – local materials

• maintenance costs – imported materials

• maintenance costs – local equipment

• maintenance costs – imported equipment

• maintenance costs – labour

• operational costs – local materials

• operational costs – imported materials

• operational costs – local power services

• operational costs – imported power services

• operational costs – labour

• other recurrent costs

Each of these costing questionnaires describes the use of a given resource according to three levels of aggregation. These levels are presented in the first three columns of the questionnaires, namely the item, sub-item and input levels, as described in section 5.4.

Once the resources involved in the realization of a water supply project have been identified, the next step is to look for data sources that provide the information needed to quantify the resources invested in the project. Depending on the available data sources, this quantification can be performed at a disaggregated level (input level breakdown) or at a more aggregated level (sub-item or item level breakdown). As

discussed in section 5.4, the disaggregated level is recommended to provide clarity in the process of valuing economic resources in monetary terms and enable transferability of the data used to other settings, while the more aggregated levels have been devised for dealing with those situations where such detailed information is lacking.

6.3.2.2.1 The Investment costs spreadsheets

To complete the costing questionnaire for investment costs in materials and equipment at a disaggregated level, the following information is needed (to fill in columns 4 to 7) for each identified resource input:

• acquisition cost in local currency;

• input quantity and its unit of measurement (selected in a menu of pre-programmed units or provided by the user);

• date of acquisition in month and year (mm.yyyy).

When the aggregated level option is used, a physical measurement of the invested resources is not required. Obviously, these two levels of evaluation can be used simultaneously in costing a drinking-water supply project.

Whatever the level of aggregation adopted, the relevant costing information is put in by selecting the disaggregated level option displayed (along with the aggregated level option) on the upper-right corner of the investment cost sheet. By next selecting the aggregated level option, the input figures will be presented in a consolidated form at a sub-item or item level.

To illustrate this point, we display in Figure 6.8 the investment cost data used to quantify, at a disaggregated level, the resources in local material invested in the implementation of the tap and private connection infrastructures of the Guantánamo-San Martín water supply project. Figure 6.9 displays the same information but consolidated at the sub-item level by means of the aggregated level option.

Filling in the costing spreadsheet for investment costs in labour will require slightly different information:

• hourly wage in local currency;

• input quantity in hours;

• date of wage payment in month and year (mm.yyyy);

• total wage cost in local currency (when data are put in at an aggregated level).

Figure 6.10 displays the investment cost data used to quantify labour resources invested in the implementation of the tap and private connections infrastructures of the Guantánamo-San Martín water supply project. The available data sources did not allow this resource to be quantified at an input (disaggregated) level. Labour costs were therefore estimated at a more aggregated level by assessing, at sub-item level, the total wage cost.

The costing questionnaire sheet for other investment costs includes costs for preliminary studies, administration, promotion, and training and education/instruction of the project staff and users. These costs are usually assessed as a share of the construction costs, a quantity of worked hours or simply a lump sum. We present in Figure 6.11 the assessment criteria (selected in a pre-programmed menu) and data used to quantity these costs for the Guantánamo-San Martín water supply project.

The costing spreadsheet for incidental investment costs includes, in particular, labour costs for work supervision and engineering studies, as well as a lump sum for contingencies. These costs are not detailed at an input (disaggregated) level and therefore are displayed in the same way by the disaggregated and aggregated level options.

figure 6.8 The Investment costs spreadsheet for local materials for the Guantánamo-San Martín water supply project showing the input (disaggregated) level.

figure 6.9 The Investment costs spreadsheet for local materials for the Guantánamo-San Martín water supply project consolidated at the sub-item (aggregated) level.

figure 6.10 The Investment costs spreadsheet for labour for the Guantánamo-San Martín water supply project showing the sub-item or item (aggregated) level.

figure 6.11 The Other investment costs spreadsheet for the Guantánamo-San Martín water supply project showing the input (disaggregated) level.

6.3.2.2.2 The Maintenance costs and Operation costs spreadsheets

These costing spreadsheets are similar to those for investment costs, as far as the cost breakdown by system component, item, sub-item and input is concerned. The main differences lie in the nature of the input level, corresponding more often to a maintenance or operational intervention rather than to resource use, and in the timing of performing these recurrent activities.

The timing of these activities is specified by setting their periodicity, the period of time (in years) after which a recurrent activity must be repeated. For most of the operational activities the periodicity will be one year.

A recurrent cost may be fixed (independent of the level of services provided by the water supply facility) or variable (a function of the level of activity of the water supply facility). For simplicity, variable costs are estimated as a proportion of the cost of the recurrent activity assessed by assuming the water supply facility operates at its design capacity (cost at design capacity). The proportionality factor is determined by the level of services provided by the facility on the date the recurrent activity is performed. This activity level is measured by one of the production indicators selected by the WSCP user’s in a pre-programmed menu. This menu includes, besides the fix cost option, the size of the population supplied with water (P), the number of household water connections (H) and the quantity of water supplied (Q). Obviously, the choice of one of these production indicators suppose that it has been previously defined by means of the Project design (for a modelled scenario using pre-programmed time trend profiles) or the Production scenarios spreadsheet (for a scenario entirely designed by the user).

The real cost (corrected for inflation) of a recurrent activity may evolve over time as a consequence of a change in the real price of some of the resources involved in carrying out the activity (for example energy prices). To deal with this issue, a trend scenario of the expected change in the real price of a resource or in the unit cost of an intervention can be calculated using the WSCP by specifying an average annual rate of growth of this variable for the expected lifetime of the project. If the real price of a resource or the real unit cost of an intervention is expected to remain the same over the system’s life-cycle, this growth rate must be set equal to zero.

Filling in the costing spreadsheets for recurrent costs will therefore require the following information (to fill in columns 4 to 7) for each identified activity or resource input:

• periodicity in years round;

• fixed or variable cost (selected in a pre-programmed menu);

• cost at design capacity in local currency of the project reference date;

• input quantity and its unit of measurement (if available);

• average annual growth rate of real unit cost.

Figures 6.12 and 6.13 display the maintenance costs in local materials and labour assessed for the Guantánamo-San Martín water supply project at an aggregated level. Note that in small rural systems the separation of recurrent labour costs between maintenance and operation may be difficult as the same person is often in charge of both tasks.

Figure 6.14 displays the labour costs for operating the water treatment of the Guantánamo-San Martín water supply project assessed at an input (disaggregated) level.

6.3.2.2.3 The Other recurrent costs spreadsheet

This costing spreadsheet encompasses several recurrent costs that are necessary for the smooth functioning of the water supply system. The most important of these include the costs for administration, training in administration, maintenance and operation, as well as health and hygiene promotion and education. These recurrent costs are usually calculated as a share of the construction costs, a quantity of hours worked or simply a lump sum.

figure 6.12 The Maintenance costs spreadsheet for local materials for the Guantánamo-San Martín water supply project showing the sub-item or item (aggregated) level.

figure 6.13 The Maintenance costs spreadsheet for labour for the Guantánamo-San Martín water supply project showing the sub-item or item (aggregated) level.

figure 6.14 The Operation costs spreadsheet for labour for the Guantánamo-San Martín water supply project showing the input (disaggregated) level.

Figure 6.15 displays the lump sum estimate of the administrative costs for the Guantánamo-San Martín water supply project.