Capacity is the ability of a water supply to plan for, achieve, and maintain compliance with drinking water standards. Capacity consists of three parts: technical, managerial, and financial (TMF). A supply must achieve and maintain all three to be considered to have adequate capacity.

The capacity development strategy describes the methods and tools to implement the capacity development program and is focused on the following elements:

1. Identify and prioritize supplies in need of improving capacity.
2. Identify the factors that encourage or impair capacity development.
3. Describe the methods the State uses to implement the strategy.
4. Describe metrics used to measure effectiveness of the strategy.
5. Identify the involvement and participation of stakeholders in the creation and updates of the strategy.
6. Asset management promotion.