The water and sanitation sector has been in the eye of the storm when referring to institutional reforms in Latin America. Concepts and methodologies have been imported from western countries and these have required adjustments of existing policies and the creation of a regulatory framework. Have these adjustments resulted in delivering an efficient implementation? What is the degree of dependence to the top-down approach, when the implementation stage comes into place?This study focuses first on understanding institutional and organisational structure in the Honduran water sector from 1990-2002. Second, the study analyses the changes generated by the institutional reform and evaluates the policy implementation of the institutional reform and their linkage with past performances and the traditional organisational structure from 2003-2006. Third, three exploratory case studies are presented as the outcomes of these institutional and organisational changes.Finally, the controversies of the institutional change are presented as dilemmas. They exposed the strengths, weaknesses and potentiality of the Water Institutional Reform (WIR). The result of the analysis is presented in the conclusions and indicates the weaknesses carried out from the traditional institutional and organisational water sector system. It proves as well that it is not only the rules that constraint the WIR process but the lack of creativity and incentives that individuals in charge -new administrators-, and not only the administration, thrust into the process.