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I don't understand the difference between Capital Expenditure (CapEx) and Capital Maintenance Expenditure (CapManEx)?

Capital Expenditure is taking in charge the improving of water and sanitation systems while Capital Maintenance Expenditure is aimed at keeping the systems running at peak performance. May you help me to understand the difference?

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The difference between Capital Expenditure (CapEx) and Capital Maintenance Expenditure (CapManEx) is:

Capital Expenditure (CapEx) are the costs of constructing a new water or sanitation system or expanding an existing system to provide a service to new additional users. If the system that you are constructing or the people that you are providing the service to are new, it is Capital Expenditure. Capital expenditure also includes 'software' costs such as the costs of one-off work with stakeholders prior to construction or implementation, extension, enhancement and augmentation (including costs of one-off capacity building). An example of CapEx software would be the cost of holding a meeting to explain alternative systems to users. Investment costs also include ‘household coping costs’ by which households spend their own money on, for example, storage tanks or water filters to achieve a satisfactory level of service.

Capital Maintenance Expenditure (CapManEx) are the cost to renewal, replacement and rehabilitation an existing water or sanitation system in order for the system to keep providing a basic level of service to users.

A nice way to understand this better is the metaphor of a car: Capital expenditure are the costs of buying a car. Capital maintenance expenditure are the costs of buying a new engine or gearbox for the car after 12 years in order to keep the car running. Operational and minor maintenance expenditure are the costs of buying fuel for the car in order to drive the car.

I hope this clarifies your question!

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Asked:
2014-03-24 02:49:58 -0500
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Last updated:
May 27 '14