Place 1 tablespoon of butter in large cookpot on the stove.
Heat over medium until butter melts.
Add chopped celery and onion and saute until onion is clear.
Add water, potatoes to pot and cook over medium until potatoes are cooked. Use a fork to check.
In a small saucepan melt remainng 2 tablespoons of butter and add flour.
Whisk flour and butter until smooth. Add milk and stir ..
Add flour mixture (roux) to the potatoes.
Add salt, pepper and ham to the mixture.
Heat 5-7 minutes until heated through.
Add cheese to the soup and serve.