Sabasaba urban water supply project was undertaken in order to increase the number of people in low-income areas within Murang’a County with access to improved water supply; to enable them to have clean water at their doorstep. In carrying out the project, World Bank employed Output-Based Aid scheme to make sure the project achieves its goals. Output-Based Aid funds predetermined project outputs unlike the conventional way of funding inputs. It serves to ensure prudent utilization of funds by shifting performance risk to the organization mandated to deliver services; it also does so by linking outputs to the ultimate payments; hence transparency during project implementation. The study sought to examine the influence of project initiation, project planning, project implementation, and project monitoring on the project performance of Output-Based Aid funded Sabasaba urban water supply project. The study adopted value chain and resource-based theories. A predictive correlation design was used. The target population was 56 employees drawn from Murang’a South Water and Sewerage Company which is the implementing agency for Sabasaba water supply project. A structured questionnaire was used to collect data from the respondents. The study results were analysed using SPSS. The study found that the project initiation had a statistically significant influence on the project performance. The findings revealed that a unit change in the project initiation would lead to 0.404 changes in the project performance holding the other independent variables constant. Article visualizations: