This report was compiled by the Government of the Federal Republic of Germany at the request of the Colombo Municipal Council (CMC) in order to assist in a project in the field of surface water drainage and public health improvements in underserved settlement in the City of Colombo. The report highlights that approximately half of the population of Colombo lives in more than 1,500 “Underserved Settlements” (USS). The report also outlines the situation regarding storm water drainage and sanitation in Colombo in general and describes the particular issues and problems that are specific to USS. One noticeable trend in this regard is the spread of Cholera which for years did not occur in the Colombo Area, gives rise to increased awareness of the insanitary conditions in the USS within the Colombo area. The objective of the project is to contribute to improve the living standards of the inhabitants of the USS; to contribute to curtail uncontrolled and environmentally and socially degrading urban expansion; to facilitate the CMC to enhance its capability in urban management; to facilitate the introduction of demand driven approaches in the provision of urban services and to facilitate the participation of non-state actors in the provision of urban services.