1. Water Utilities Financial Planning
March 21, 2017
ACWUA Arab Water Week
Ahmad Al-Azzam
Allied Business Advisors

2. AGENDA Planning Process Strategic Plan
Financial Planning Objectives & process
Follow Up and Update
Critical Success Factors
Conclusion

3. Planning – Things to Keep in Mind
Planning is an ongoing process & not a one time event
Plans are highly integrated & dependent on each other
Financial Planning is an integral part of planning & not a stand alone process
All plans feed into Financial Plans
Plan is not a wish list

4. Planning Process

5. Strategic Plan
Sets direction to improve performance and explore opportunities
Identify how to get from where you are to where you want to be
Living document to set medium term plan 3-5 years
Updated annually and at major events
All components are linked and lead to the same direction
Utilizes utility’s water and wastewater master plan as a base

6. Strategic Plan Components
Purpose of the Strategic Plan
Introduction
History, management and partners
Background
What the utility wants to achieve (Direction)
Vision
Principles followed by the utility
Values
Describes the purpose of the utility
Mission Statement
Key issues need to be addressed (Coverage, Quality)
Problem Statement
Internal & External Factors
SWOT
Measurable and actionable specific target
Goals & Objectives
Measure achievements Operational, financial &KPIs
Evaluation

7. Financial Planning Objectives
Translate utility’s objectives into financial indicators to set and measure progress and achievements
Shows financial impact of utility’s strategic & operational plan (financial performance and cash flow)
Highlights financial challenges for utility’s management

8. Financial Planning Process

9. Financial Plan Component
Revenue Plan: Water Quantities, Tariff, Subscribers
Inventory Plan: Strategy & policy
Purchasing Plan (Material & Fixed Assets): Operational details & policy
Human Resources Plan: Operational plans and utility’s policy
O&M Plan: Operational plan, Financial data & Water balance
Compiled Financial Plan (for Strategic Plan) or Annual Budget
Financial Statements & Key Performance Indicators
Regular Follow up & Variance Analysis
Regular Update

10. Regular follow up and analysis (Quarterly & Annual)
Follow Up and Update
Variance (Actual vs. plan), and why?
Is the plan still valid or needs update
Regular follow up and analysis (Quarterly & Annual)
Annual for medium term plans (national and strategic plans),
Quarterly for annual plans (operational and budget)
Regular update & At major events

11. Critical Success Factors
Top management commitment to planning & transparency 
Availability of risk plan, governance and related tools
Involvement of staff at different levels (Ownership & Commitment)
Predefined process, responsibilities and forms
Achievable with available capabilities and resources
Automation (ERP and other tools)

12. Conclusion: Effective Plans
If you don’t know where are you going you will end up somewhere else (Sense of direction)
Should be realistic
Involve utility’s team
Translated into financial indicators
Updated on a regular basis

13. Thank You
Ahmad Al-Azzam
Allied Business Advisors