Costing sustainable services The life-cycle cost approach
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1 Costing sustainable services The life-cycle cost approach Catarina Fonseca and Peter Burr International Water and Sanitation Centre Water and Sanitation Services That Last
2 Agenda for webinar 1. What is the life-cycle costs approach 2. From theory to practice 3. Uptake: What s in it for you
3 Partners All materials available from:
4 Life-cycle costs approach: What is it? Water and Sanitation Services That Last
5 Non-functionality and decreasing service levels
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10 What are the life-cycle costs? The costs of ensuring adequate water, sanitation and hygiene (WASH) services to a specific population in a determined geographical area - not just for a few years but indefinitely.
11 What are the cost components?
12 What are the cost components?
13 What are the cost components?
14 What are the cost components?
15 What are the cost components?
16 How to compare costs when services are different?
17 Water service levels Service level Quantity (lpcd) Quality Accessibility (minutes per round trip= distance and crowding) Reliability (number of days functioning) High >= 60 Good <= 10 Very reliable Intermediate >= 40 Basic (normative) >= 20 Acceptable <=30 Reliable/secure Sub-standard >=5 Problematic <=60 Problematic No service (after intervention) <5 Unacceptable > 60 Unreliable/insecure Source: Moriarty et al., 2011
18 Source: Moriarty et al., 2011 Water service levels Service level Quantity (lpcd) Quality Accessibility (minutes per round trip= distance and crowding) Reliability (number of days functioning) Status (JMP) High >= 60 Good <= 10 Very reliable Intermediate >= 40 Basic (normative) >= 20 Acceptable <=30 Reliable/secure Improved Sub-standard >=5 Problematic <=60 Problematic No service (after implementation) <5 Unacceptable > 60 Unreliable/inse cure Unimproved
19 % of population Different systems and still very low services overall 100% Combined service level (quantity + quality + accessibility + reliability) in Mozambique sample 80% 60% 40% 20% No Service Sub-Standard Basic 0% Borehole and hand pump Small piped system Well Source: WASHCost team Mozambique, 2011
20 Exclusion analysis: different caste groups in a village in Andhra Pradesh (India) Source: WASHCost team India, 2011
21 Toilets: access and use by different caste groups Andhra Pradesh Source: WASHCost team India, 2011
22 Water and Sanitation Services That Last Life-cycle costs approach from theory to practice
23 LCCA: bringing costs and service levels together
24 Service levels and costs: WASHCost sample for rural water Andhra Pradesh Burkina Faso Ghana Mozambique Total Number of rural communities sampled Detailed HH surveys Other data sources ,743 3,046 1,273 1,710 11,772 Borehole drilling contract data, financial record from small towns, census data
25 Water system Water facilities in the countries where cost information was collected/compared Definition Andhra Pradesh Burkina Faso Ghana Mozambique Borehole and manual hand pump Mechanised Borehole Single village scheme Multi village scheme Mixed piped supply Small distribution network connected to public stand post. Limited storage and provision for HH connections Reticulated supply with village storage Centralised supply serving a number of communities Overlapping service delivery systems
26 % of population Cost per person US$ (2010) 100% 80% 60% 40% 20% 0% Low levels of service can be costly Mean capital expenditure per climatic zone of Andhra Pradesh compared with service levels No Service Sub-Standard Basic Intermediate Cost per person Source: WASHCost team India, 2011
27 % of users with a basic service level More complex systems do not necessarily provide better levels of service (even with higher post-construction expenditure) 60% 50% Size of bubble denotes expenditure per user (US$2010) 40% % % % 0.1 0% Andhra Pradesh Burkina Faso Ghana Mozambique Mechanised Borehole Single Village Scheme Multi Village Scheme Mixed Piped Supply Borehole and Handpump Source: WASHCost Burkina, Ghana, Mozambique and India teams, 2011
28 US$ (2010) Capital costs of boreholes with hand pump systems CapEx (current costs) Andhra - HH Exp. Andhra - Gov't Exp. Burkina Faso Ghana Mozambique CapEx (PPP)
29 Implications for the sector 1. From delivering technology to deliver services what can be done to speed up change in mind-set? 2. Expenditure on direct support and capital maintenance are not happening how can the sector finance this expenditure? 3. Who s accountable for sustainability? For delivering change, understanding costs necessary but not sufficient
30 Uptake: examples of use and what s in it for you Water and Sanitation Services That Last
31 Many organisations and governments already using components of the life-cycle costs approach Source: 2011 WASHCost annual report
32 Replication of components of LCCA by type of organisation (Jan 2012) NGO Government Development Bank United Nations family Academic Training inst. Foundation Project Network Using components of LCCA Planning to use components of LCCA Source: 2011 WASHCost annual report
33 Example from Ghana (Government) - Cost components and service level norms within District Monitoring and Evaluation System (DiMES) going to become a national monitoring system. - Working groups on how to finance capital maintenance and direct support Source: WASHCost team Ghana, 2012
34 NGO Fontes Foundation in Uganda Costs by categories for their Katunguru water project in 2010$US Source: Koestler et. al, 2010
35 What early adopters say 1. Non-functionality is high. How can I increase functionality with a better understanding of costs? 2. There are a lot of investments on infrastructures, but resulting services are low. Can we get more value for money? 3. The donor says is too expensive. Can I show that my programme is cost effective? 4. I want to monitor sustainability. What are the best indicators?
36 What early adopter say 5. My organisation uses different approaches, I want to see which one is more cost-efficient. 6. As district government I need to ensure the maintenance of existing infrastructure. How can I calculate who will pay how much for what? 8. As local government I need to plan, budget and monitor WASH services 9.?
37 The end Thank you
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