www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 11, March-2013 Page 84 Cost of Poor Quality in Municipal Water Supply System: A Case Study of Public Sector Organization Mr. Mahmood Shahid, University of Engineering and Technology Taxila, Pakistan Mr. Shahrukh, University of Engineering and Technology Taxila, Pakistan & Dr. Sajid Ali, University of Engineering and Technology, Lahore Director, Institute of Business & Management Abstract Water supply system of Islamabad, the capital of Pakistan is being managed by a public sector organization, Capital Development Authority (CDA. Water obtained from multiple sources is treated and supplied to consumers through a pipe network. A quality audit of its water supply system has been carried out by exploring historic data, visiting sites, quality testing and unstructured interviews. Historic hospital data of water borne diseases has revealed problems in the water quality. Main problems are 55% water wastage and water borne diseases due to contaminated water. Water is being supplied on subsidized rates, whereas, a very high cost is being paid for water treatment and supply by CDA. Cost of Poor Quality to the extent of US $ 25.719 million was borne by the general society and national economy in one year as a result of internal and external failures of water supply system. Consumer confidence is very low (27%) on the drinking water quality being supplied to them through pipe network. Some preventive measures have been suggested to reduce the Cost of Poor Quality. Key words: Cost of poor quality, water contamination, water quality, water supply system Introduction A reliable supply of clean potable water is vital to the health, safety, welfare and prosperity of every living person. Drinking water quality should conform to WHO standards and should be safe for domestic consumption without any immediate or long term risk (WHO -2004). There are two main water sources; surface reservoir and subsurface aquifer. Poverty and high population growth is creating environmental problems, and putting pressure on water resources and quality. Most people have no choice but to use unclean unhygienic water not only for all their sanitation needs, farming, and livestock but for drinking as well (YesPakistan.com). In order to examine the efficiency of water treatment and supply system a case study of Islamabad has been carried out. Capital Development Authority (CDA) is responsible to arrange, treat and deliver potable water to the citizens of Islamabad. According to NESPAK (2006) report, Islamabad has a population of 0.800 million, which is growing at a rate of 5.19 % per annum and has the highest per capita water consumption rate in Pakistan. Water demand fluctuates with respect to seasons and temperatures. Islamabad is also located in a zone which receives more rainfall as compared to other parts of Pakistan (1143 mm per annum) (NESPAK -2006) . Terrain and soil classification is such that rain water quickly flows down the natural storm channels and contributes little towards recharging of sub soil water. According sources of CDA, over the years due to fewer rains and excessive pumping of ground water, the water table has lowered below 150 ft, resulting in drying up of many tube wells. CDA is getting water from tube wells and open reservoirs/channels, the raw water is treated before supply to consumers. Water quality was checked at the main water reservoirs, treatment plants and water filtration plants to find out the quality level of water being supplied to consumers. Research was also conducted to know the extent of water borne diseases and cost incurred thereof, to find out the external failure cost of cost of poor quality. Significance of the study: In depth analysis of water treatment system, water supply and management system and water borne diseases has revealed many hidden areas which need the attention of city managers and the