Municipalities in Canada have noted that 59% of their water systems need repair, and the condition of 43% of those systems is apparently intolerable. Hence, large volumes of rehabilitation projects are necessary to improve the performance of Canadian water systems. A reliability (R) and criticality index (CI) are crucial for prioritizing rehabilitation activities and distribute budgets efficiently. “R”is a function of failure rate, while“CI”is a function of economic, operational, social, and environmental factors. The research presented in this paper aimed to develop a performance index (PI) that considered the combination of “R” and “CI” for water networks. Sound techniques were utilized to generate the PImathematical model, such as reliability theory, simple multi-attribute rating technique (SMART), and Analytical Hierarchy Process (AHP). Data on water networks were collected from the city of Hamilton, Ontario, Canada. Four sub-networks were selected from the entire network to represent four types of land uses; undeveloped, residential, park, and commercial/industrial. The results showed that the PI value was 0.72, 0.93, 0.87, and 0.76 for these types of land uses, respectively. The developed models and tools are assumed to be beneficial for municipal engineers and managers as well as academics.