Encountered geological challenges and COVID-19 lead to dam cost increase

25 February, 2021

WWL CEO Mike Scott informed Shareholders on Monday and Councillors on Thursday in the company’s six-month update, that significant progress had been made in the construction of the Waimea Dam, with it now being approximately 50% complete, site foundations mostly exposed and adapting the design to the conditions largely complete.

“Over the last six-months the Waimea Community Dam project has progressed considerably,” Scott said. “The design has been updated and adapted to the encountered conditions, the mechanical and electrical design largely completed to progress procurement and a construction schedule implemented to meet our targeted April 2022 completion date. This progress has happened without any serious harm injuries or lost time injuries, and full compliance with resource consent requirements.”

Scott recognises both the necessity of the dam to the region, and the scale, complexity and challenge of the project for a small region.

“We are keeping the costs as low as possible, while building a safe, reliable, resilient and fit for purpose dam that serves our community for a very long time,” he said. “With the majority of design elements completed and the dam project now approximately half constructed, we can more accurately forecast costs and known risks.”

Scott said that WWL now expects and forecasts a cost to complete of $147.2M, excluding COVID-19 costs and associated delays.

Scott adds that the COVID-19-related costs experienced to date, the associated delays to the project and a provisional allowance for future impacts resulting from COVID-19 cost an additional $11.2M, such that the forecast cost to completion is $158.4M.

Recognising residual uncertainty in COVID-19 costs and geology, Scott expects the cost to be between $148M to $164M.

Given the delays to the project, predominantly due to COVID-19 restrictions, Scott said that WWL and its contractors are planning to complete the dam after the summer season in May 2022 and to fill the reservoir in September 2022. WWL intends to have the dam commissioned and operational in time for the 2022/2023 season.

Scott reiterated that WWL is working very hard to keep the costs as low as possible, continuing to look to save costs and introduce construction efficiencies where-ever possible.

“The efforts of the WWL team, our constructor Fulton Hogan and Taylors, our dam engineers Damwatch Engineering Ltd and the rest of the wider Waimea Community Dam organisation are focused on this goal. Working six 12-hour days each week, and rising, no one can doubt the effort going into building this legacy, game-changing asset for the region, as safely and cost effectively as possible. We are already the envy of many regions staring at water deficits, and our region is already seeing some economic benefits from the dam’s construction, with wider benefits to come when it is commissioned in just two summers.”

More information about the project will be available in WWL’s Mid-Year Report and draft Statement of Intent due to be presented to the Tasman District Council on the 1st of March 2021.