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The profiles of 60 water districts were prepared through the joint efforts of the respective water district staff and the Project Team in the last Fiscal Year. Each profile contains the existing water supply condition, financial position, result of the social needs survey, and immediate improvement project. Based on all the information in the profiles, the Project Team selected 20 water districts through the following three processes;

I. Screening Process

Prior to the screening process, it was found out that 3 water districts namely; Kiblawan, Buenavista, and San Isidro water districts do not have loan arrears with LWUA which was one of the criteria for the selection of 60 water districts. Therefore, these water districts were eventually not included in the screening process.

The project team employed qualification conditions for screening purposes. It was decided that the water districts which cannot meet these conditions would be unable to attain a successful outcome to the Project. In other words, these conditions are a must for the water districts to attain the project objective. As a result of the screening process, 41 water districts out of 57 passed these conditions.

The qualification conditions are the following:

1. The water district must have a strong interest/willingness to participate in the Project.
   
2. The water district must have strong social needs for service improvement and expansion.
   
3. The proposed immediate improvement project must be technically feasible.
   
4. The revenue of the WD as a result of the proposed immediate improvement project must be greater than its expenditure.

Qualification Condition 1: The water district must have a strong interest/willingness to participate in the Project.

• The Project Team considers that a water district with poor interest/willingness to participate in the Project cannot be expected to have any positive output/outcome.
  
• Interest/willingness of a water district was evaluated by the Project Team from the view point of participation and cooperation of the water district's staff to the different activities during profile preparation, social needs survey, and follow up activities for finalization of profile.
  
• None of the water districts are omitted.

Qualification Condition 2: The water district must have strong social needs for service improvement and expansion.

• Social needs are evaluated based on the "Social Needs Survey" which is composed of studying improvement needs in the present service area and expansion needs in the un-served area/s.
  
• The Project Team considers that a water district which has less than 60% of either one of the social needs is not a priority water district to address in the Project.
  
• Two water districts are omitted, namely: Morong WD and Linamon WD.

Qualification Condition 3: The proposed immediate improvement project must be technically feasible.

• The Project Team evaluated the technical feasibility of the proposed Immediate Improvement Project from the view point of four major aspects (water source, water supply system, water supply facilities and service coverage).
  • Water Source: The Project Team considers that a water district which has no appropriate water source cannot expect a successful outcome in the Project.
    
  • Water Supply System: The Project Team considers that if an appropriate water supply system (e.g. fill-and-draw distribution system) is not proposed, proper expenditure control for operation of the system cannot be secured.
    
  • Water Supply Facilities/Equipment: The Project Team considers that if the proposed facilities/equipment is not technically and financially affordable to the water district, these facilities/equipment cannot not be sustained.
    
  • Service Coverage: The Project Team considers a water district not a priority if the proposed project is not considering service population/coverage expansion.
    
• Three water districts which have no appropriate water source are eliminated, namely: Unisan WD, Cabarroguis WD and Barbasa WD.

Qualification Condition 4: The revenue of the WD as a result of the proposed immediate improvement project must be greater than its expenditure (Revenue - Expenditure ?0)

• The Project Team considers that a water district which has a negative financial position as a result of the proposed immediate improvement project cannot attain financial viability and self-reliance.
  
• Eleven water districts which have negative financial positions as a result of the respective proposed immediate improvement project are disqualified, namely: Barotac Viejo WD, Libacao WD, Ibajay WD, Sinait WD, Jaro WD, Candelaria WD, Tukuran WD, Matnog WD, Hamtic WD, Carmen WD and Calinog WD.

II. Ranking Process

41 water districts which passed the screening process are ranked based on the following policies and criteria set by the Project Team. Top 20 water districts will be granted financial assistance for their physical improvements in the Project. Numbers 21 to 25 will be reserve candidates in case any of the top 20 fails to comply with conditions/requirements and eventually is disqualified. The Project Team will keep evaluating the WD's participation in all aspects of the project activities. If the Project Team sees poor participation/cooperation on the part of the water district, that water district may be disqualified anytime. Numbers 26 to 41, plus the 16 water districts which did not qualify during the screening process are provided technical assistance to enhance their staff's technical and managerial skills through various training programs.

Policies for the selection of 20 water districts are the following:

1. Give most priority to the water district that has a high possibility/potential to recover financial viability with the Project by 2010
   
2. Give priority to the water district that has a high possibility/potential to attain self-reliance and self-sustainability after the Project in 2010
   
3. Give priority to the water district that can contribute in achieving the Millennium Development Goal (MDG) and the Medium Term Philippine Development Plan 2004 - 2010 (MTPDP)
   
4. Give priority to the water district that has a high project cost effectiveness.

Criteria and its weights for the selection of 20 water districts are the following:

Criteria Weight Measure Formula

III. Confirmation Process

All the top 20 candidate water districts are visited and interviews with the General Managers (GMs) and members of Board of Directors (BODs) were done to confirm WD's willingness/determination to participate in the project. The qualifications of the GMs are also evaluated through discussions to make sure that they are able to participate in all the project activities with strong and determined leadership. The following topics are discussed during our visits:

1. Their financial position (reason why WD has arrears)
   
2. Problems with concessionaires (reason why collection efficiency of water tariff is low/reason why WD has failed to increase water tariff)
   
3. Problems dealing with local officials/BODs
   
4. Idea of GM for future expansion and market development (social needs)
   
5. Proposed immediate improvement project
   
6. Requirements/conditions that WDs must comply with through Board Resolution for inclusion in the 20 candidate WDs.

As of June 2006, Project Director and Project Manager have visited 10 candidate Water Districts (WDs) of the 1st Group and have interviewed the GMs and some members of the Board of Directors (BODs). It was confirmed through discussions with the GMs and BODs that all the 10 candidates WDs of the 1st Group have strong interest and willingness to participate in the Project. It was also confirmed that all the GMs are really qualified to be part of our Project Team.

Further, all of 10 water districts have submitted us the board resolution which commits them to undertake all the requirements/conditions presented by the Team. Requirements/conditions required by the Team and complied with by the 10 candidate water districts are the following:

A. Physical Conditions

1. Land Acquisition (Deed of Donation or Purchase) - for sites of proposed structures like well/pumping stations, reservoirs, etc. (Please refer to the WD profile for the scope of your project).
   
2. Right of Way (Accessibility, Road Permits) - for pipeline excavation/laying and other activities
   
3. Acquisition of Water Rights - for additional water sources
   
4. System Monitoring - for water sources and system flow

B. Management Conditions

1. Active and continuing participation of WD in all project related activities
   
2. Avail technical support from other WDs or any other expert in the planning and construction supervision works, when necessary
   
3. Conduct information dissemination to get support and cooperation from constituents (ex: news bulletins, publications, and regular consultations with local residents to disclose information and share accountability to the project)
   
4. Proper operation and maintenance of facilities constructed under the project
   
5. Regular and on-time submission of Monthly Data Sheets to LWUA

C. Financial Condition

1. Make current the status of the WD's loan from LWUA once your project is implemented.
   
2. To ensure long-term financial viability, savings from increased revenues shall be properly put aside, as reserves, for future expansion and/or replacement of facilities

The team also visited 5 reserve WDs to inform of their standings and possibility of inclusion in the Project. All the 5 reserve WDs understood their standings and committed full cooperation and participation in the forthcoming project activities.