Waimea Community Dam cost revised due to encountered geology and inflation

The encountered geology, high inflation, and global supply chain issues have resulted in a reforecast of the cost to build the Waimea Community Dam.

Waimea Water Limited (WWL) will report in its mid-year report for the 2022 financial year that the cost to construct the dam has been revised to $185M, requiring additional funding of $20M over the $164M estimate in 2021. This current cost estimate excludes some residual risks that will be evaluated before the end of the financial year on 30 June 2022.

WWL CEO Mike Scott said WWL has a tight focus on financial management and is doing all it can to minimise costs without compromising safety, reliability and sustainability.

“No one can question the huge effort everyone is putting into this legacy project for our region, and I thank everyone involved with the project for their great effort and work,” Scott said. “At a point in this project where we have been forced to revise the cost because of issues outside of our control, I’d like to remind people just how much has been achieved.”

“The dam is more than 70% complete, and significant elements are now constructed, including the rock-filled embankment, lower spillway, flip-bucket and plinths,” he said. “This is a fine achievement, given the unpredictable challenges of building a dam during a global pandemic, and the bad winter weather we had last year.”

Scott also highlights the outstanding safety performance to date, with no lost time injuries, and the project’s compliance with the resource consent.

“This strong health and safety performance cannot be overstated. I am very grateful for the effort, diligence and discipline the contractor and the wider team is making, to ensure our people and the environment we work in, is safe and compliant.”

Scott said the geology risk to the project has reduced, now that the site’s geology is largely exposed and construction is out of the ground.

“With construction progress, the geology risks are now reducing,” he said. “We can see what we are working with, and we have engineered solutions to overcome the geological challenges. The highly fractured left-hand side has been very unkind to us, with shear-zones in about the worst possible places, bisecting both the top and bottom of the spillway. These geological issues were not known at the beginning of 2021 when they were under 50 metres of hill.”

The solutions engineered in late 2021 on this left-hand side area, and other solutions to the geology, such as the need to import sand and rock for the embankment’s safety-critical material, have added significantly to the construction costs.

“The geology of the plunge pool and top of the spillway continue to be a risk for the project, but these will be resolved over the coming months,” he said.

Scott also said that “the inflationary costs of the hot economy have been painful.” “Global demand and inflation of mechanical materials and components have contributed to the cost increase, as is the slow and unreliable international supply chain.” he said.

Scott adds that the COVID-19 site shutdowns and restrictions in 2020 and 2021 have impacted on the project’s costs and construction timeline.

WWL also reported that it expects the dam structures to be completed between July and September this year, ready for the reservoir to be filled this spring. WWL highlights, however, the risk of delay due to further COVID-19 site restrictions, resource and material constraints within a very constrained construction sector and further delays in the delivery of internationally-sourced components.

“Future COVID-19 impacts to both our site and the New Zealand-wide workforce and suppliers are virtually impossible to predict and could very well further delay the project,” said Scott. “We just don’t know who is going to have to stay at home and who can come to work.”

Scott added that WWL will transition from construction to operations later this year.

ENDS