More than two-thirds of the watersuppliers in Cambodia are unlicensed, unregulated privatebusinesses that often provide untreated water at substandardquality. One of the foremost challenges in convertinginformal water suppliers in Cambodia to formal, licensedsuppliers is capacity building. The World Bank CambodiaWater and Sanitation Program (WSP) have designed aninnovative project to combat this problem. This smart lessondescribes our capacity-building program for domestic privatewater supply providers to help them develop the right skillsand competencies. The program includes some useful tools,such as the Enterprise Resource Management System (ERMS), aspecial integrated software application created bycollecting all the lessons learned from water supplyutilities in capacity-building projects funded by the WSP,and also a performance improvement toolkit that willfunction not only as a road map for the capacity developmentof new and existing water providers but also as a tool forthe government to use in developing official standardoperating procedures (SOPs).