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Indiana Department of Environmental Management


Capacity Development: Size and Strength

When Should I Do Capacity Development?

Water systems must comply with the Indiana rule on capacity development [PDF]. The 1996 Amendments to the Safe Drinking Water Act (SDWA) require drinking water systems to comply with capacity development requirements. Capacity development ensures that systems acquire and maintain the technical, financial, and managerial capacity needed to achieve consistently the public health protection objectives of the SDWA. In short, capacity development is about helping systems uniformly provide safe drinking water.

This section will discuss capacity development for all systems and how to develop capacity for drinking water systems, as was mandated by the amendment to the Safe Drinking Water Act noted above.

Developing Strength

There are three types of capacity: technical, managerial, and financial. The capacity of the organization is every individual and committee doing their best and living up to their own personal capacity in their work.

Increasing Technical Capacity

Technical capacity refers to the physical infrastructure of the water system, including but not limited to the adequacy of the source water, infrastructure (source, treatment, storage, and distribution), and the ability of system personnel to adequately operate and maintain the system and to otherwise implement technical knowledge.

Increase Managerial Capacity

Managerial capacity refers to the management structure of the water system, including but not limited to ownership accountability, staffing and organization, and effective linkages to customers and regulatory agencies.

Increase Financial Capacity

Financial capacity refers to the financial resources of the water system, including but not limited to revenue sufficiency, credit worthiness, and fiscal controls.

The PowerPoint presentations in this section of this guide provide a good training tool for a board or anyone associated with a district. The target audiences of the presentation are board members. Each of the three areas is covered in a different presentation. The PowerPoint Presentations are taught in two hour training sessions by the Rural Community Assistance Project (RCAP) and the Alliance for Rural Water with the first session in the spring, the second in the summer, and the third in the fall of each year. Call these organizations for times, dates, and locations near you. Training locations are across the state of Indiana. After you complete each session, you will receive a certificate noting your completion.

Utility Board Training Power Point Presentations

Always remember that other districts can be a great help in mentoring you through this process by sharing what has worked for them.

Capacity Development for Water Systems

The Drinking Water Branch in the Office of Water Quality developed a capacity development self-assessment tool [PDF] which discusses the three types of capacity and can allow your district to see where more hidden costs may lie for which you have not budgeted. For more information, contact the Capacity Development Coordinator at IDEM's Drinking Water Branch by phone at (800) 451-6027.

The State of Idaho DWSRF also has a different self-assessment which provides a guide to analyzing affordability of your system. This is helpful when calculating the costs that people can afford to pay for the initial system, for expanding the system or when adding new equipment.

The self-assessment is essential and required to develop a water system management plan. The PowerPoint presentation prepared by IDEM's Capacity Development area [PPT] at the Drinking Water office lists state requirements as of summer 2006 for new water systems.

IDEM has two free guidebooks which will help you to develop this plan. The first is for new systems, called Information Handbook for Preparing A Water System Management Plan [DOC]. The second resource which can help more established water systems is called Drinking Water Guidance Manual. Both of these resources can be obtained by calling IDEM's Drinking Water Branch at (800) 451-6027.

Developing Size

Increasing capacity to more than 100,000 gallons makes your facility a significant water withdrawal facility (SWWF). There are some additional requirements when you increase the size of your drinking water facility.

Facilities must register with the Indiana Department of Natural Resources (IDNR). Once registered, a facility receives an identification number. The facility will receive annual forms which are different for each facility. The facility will have to record its monthly withdrawals and send them in once a year.

This is a free program. To apply, download the online form (now available on the IDEM Forms page), or contact IDNR. Contact information for the IDNR is located in the association list.

The district must register within three months of the completion of your SWWF.


The following resources are available to help you with capacity development. In addition, many of the associations on the association list that provide free assistance will help you to create resources or learn and enhance your tools in managerial, technical, and financial capacity.

From the U.S. Environmental Protection Agency (U.S. EPA)

The U.S. EPA has released a PDF file similar to an e-book about capacity development for small systems called "Handbook for Capacity Development." They have a staff member assigned to our U.S. EPA region, who may assist you. That contact information is listed in the index of contacts in the reference section.

The U.S. EPA wrote a guide called, "Asset Management: A Handbook for Small Water Systems -- One of the Simple Tools for Effective Performance (STEP) Guide Series." There is also another simple guide called "Taking Stock of Your Water System [PDF]."

All of the materials above are available by calling the Safe Drinking Water Hotline at (800) 426-4791.

National Small Flows Clearinghouse

The National Small Flows Clearinghouse is another good resource, which is currently funded by the U.S. EPA. They have publications for low or no cost, a hotline where you may call and ask questions, a listserv, a Web site, and many other materials. Their mission:

"The NSFC helps America's small communities and individuals solve their wastewater problems to protect public health and the environment. Community leaders as well as individual homeowners can benefit from the NSFC's services. As a nonprofit organization, we provide objective information about onsite wastewater collection and treatment systems for communities of less than 10,000 people. The NSFC is the only national resource of its type dealing with small community wastewater infrastructure."

National Small Flows Clearinghouse
West Virginia University/NRCCE Building
P.O. Box 6064
Morgantown, WV 26506-6064
Phone: (800) 624-8301 or (304) 293-4191
FAX: (304) 293-3161
E-mail: nsfc_contact at
Web site:

Resources on the Web

For nonprofit utilities, the Capaciteria Web site is full of directories and access to free resources with free membership for nonprofits. It discusses capacity issues from lobbying to management to grants.

The Basic Guide to Non-Profit Financial Management provides a good summary of nonprofit financial management, including useful ratios and other good tools. If you are seeking basic information or to improve your financial management skills, the site is complex but full of easy to understand resources. This Web site would be a good utility for someone seeking very specific information such as the advantages of leasing versus buying specific items. Additional, there's a specific area on capacity building.

Ratio 8 is a computer program, provided free of charge by Boise State. It computes financial ratios for you and can help your district forecast its financial capacity for upcoming years. Ratio 8 splits financial capacity into three smaller areas and details each area. They also explain on their Web site how these ratios fit into capacity development.

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