Ex post facto impact evaluation of the Water and Sanitation Sector project (1985-91) in Sri Lanka, implemented by the National Water Supply and Drainage Board (NWSDB). The evaluation, which focused on sustainability, was conducted in 8/93. The major gains in institutional strengthening made over the life of the project have been maintained. Performance improvement was most striking in the area of financial viability and commercial performance. Since the end of the project, billings have increased by 98%, and collections by 125%. in 1992, the Board met its goal of covering operations and maintenance costs and two-thirds of debt service, and generated a surplus of 189 million rupees. in addition to financial viability and commercial improvement, performance had significantly improved in three other areas: relations with external entities; use of modern management tools of analysis; and implementation of preventive maintenance of facilities. Performance had improved to some extent in the following areas: budgeting; decentralization and regional level capacity building; and use of training and human resources development. in four areas, performance in 1993 was much the same as at the end of the project: strategic problem-solving and forward planning; operating and maintaining systems, and producing a high-quality product; consumer relations and responsiveness to consumers; and delegation of authority to the regional level and below. in general, NWSDB demonstrated patterns of organizational behavior and managerial action that (mostly) supported its improved institutional effectiveness. Four patterns of behavior supported sustainability: (1) setting targets collaboratively, monitoring performance against those targets, involving people in developing strategies and plans to deal with problems identified in the monitoring process, implementing those plans using a variety of approaches and then continuing to monitor progress; (2) staff at working levels taking the initiative when a problem exists and not waiting for directions from the top; (3) providing continued training, coaching, and consultation in support of clear programmatic objectives; and (4) creating an organizational environment in which "it's not okay not to care." Two patterns of behavior inhibited sustained institutional improvement: (1) paying attention to short-term operational issues at the expense of long-term planning and policy development; and (2) micro-managing at all levels. (Author abstract)