Difference between revisions of "Capital Expenditure (CapEx)"

Capital Expenditure is the costs of providing a water or sanitation service to users where there was no service before; or of substantially increasing the level of services received by users. It includes the capital invested in first time construction or purchase of fixed assets such as concrete structures, wells, pumps, pipes or toilets prior to implementation of the service and to improve or expand existing water or sanitation systems. Costs for rehabilitation or replacement of major parts of a water or sanitation system, such as replacing a pump, are considered expenditure on capital maintenance (CapManEx).

Capital expenditure (CapEx) consists of expenses on hardware and software (see figure 1). Capital expenditure hardware (CapEx hrd) includes expenditure on fixed assets as pumps, pipes, etc. and required equipment such as vehicles or offices to support the construction of water and sanitation systems prior to implementation of the service. Capital Expenditure software (CapEx Sft) includes the costs of one-off work with stakeholders prior to construction or implementation or extension of the service such as one-off training of pump mechanics or caretakers, community mobilisation or hygiene education.

Figure 1 Capital Expenditure (CapEx)

Source: Smits et.al, 2011, 7.

Examples

According to the 2012 GLAAS report (WHO and UN-Water, 2012, 29), 69% of funds for water and sanitation expended in 11 respondent countries were directed towards Capital Expenditure (see figure 2).

Figure 2 Capital expenditure versus operational and maintenance expenditure

Source: WHO and UN-Water, 2012, 29

Key Documents

Supporting documents, manuals.

Links

External or Akvo internal links.

Acknowledgements

Page credits.