This paper presents a methodology for participatory evaluation of small group capacities and performance that has been developed for water-user associations in Sri Lanka. The system devised was one of self evaluation and was presented to the farmer groups as a system of self strengthening. The process of self evaluation is described in some detail in the first section of the article which consists of five activity areas in which farmers assess their own performance. The activity areas range from the economic/material activities of the project groups to the organisation and development of the groups. The approach was designed to be an iterative and consultative one i.e. the criteria for evaluation, although initiated by the programme were to be agreed and selected by the program participants themselves. The paper lists the different stages of the process and describes six reasons or rationales for the use of such an approach. Briefly, the paper concludes by identifying some of the more prominent problems associated by this approach.