The paper researches water quality, supply and management system assessment problems of the Montenegrin costal region. A significant problem is generated by seasonal tourism, the main branch of Montenegrin costal economy. The selected performance indicators model has been tested in the water supply system of the city Herceg Novi, as a representative experimental system for the Montenegrin costal area. The city Herceg Novi has 33.000 permanent residents and around 80.000 individual consumers during the summer touristic season. The research activities are based on the seasonal parameters defined by the monitored performance indicators of the water supply system. The study depicts the developed indicators performance model based on the obtained experimental monitoring data. Within the experimental analytical research performance an indicator matrix was established. The coastal area of Montenegro is experiencing over 50 % of water loss. Structure developed in the model applies the performance indicators and results in systematic losses reduction. The model takes into account the principle of seasonality, and the existence of two completely different periods of the year. This type of the experimental research with testing in situ was for the first time performed and implemented in the costal Adriatic region of Montenegro.