Changes

To achieve sustainable services all life-cycle costs need to be planned for and adequately funded. If funding streams are not sustainable, or if responsibilities for financing are not clearly defined, it is unlikely that all costs will be covered. Few countries specify the financing requirements for the critical components of: large-scale capital and maintenance expenditures ([[Capital Maintenance Expenditure (CapManEx)|CapManEx]]), replacement expenditures and expenditure on direct and indirect costs ([[Expenditure Direct Support (ExpDS )|ExpDS]] and [[Expenditure Indirect Support (ExpIDS)|ExpIDS]]), including the vital function of post-construction support and monitoring.

[[Capital Maintenance Expenditure (CapManEx )|CapManEx]] is the cost category that is least clearly understood, much less planned for. CapManEx includes expenditure on asset renewal, replacement and rehabilitation costs, based upon serviceability and risk criteria. CapManEx covers the work that goes beyond routine maintenance to repair and replace equipment in order to keep systems running. Accounting rules may guide or govern what is included under capital maintenance, and the extent to which broad equivalence is achieved between charges for depreciation and expenditure on capital maintenance. Capital maintenance expenditures and potential revenue streams to pay those costs are critical to avoid the failures represented by haphazard system rehabilitation.

[[Expenditure Direct Support (ExpDS )|ExpDS]] includes expenditure on post-construction support activities direct to local level stakeholders, users or user groups. In utility management, expenditure on direct support such as overheads is usually included in OpEx. However, these costs are rarely included in rural water and sanitation estimates. The costs of ensuring that local government staff have the capacities and resources to help communities when systems break down or to monitor private sector performance are usually overlooked.

[[Expenditure Indirect Support (ExpIDS )|ExpIDS]] includes macro-level support, planning and policy making that contributes to the service environment, but is not particular to any programme or project. Indirect support costs include government macro-level planning and policy-making, developing and maintaining frameworks and institutional arrangements, and capacity-building for professionals and technicians.