Waimea Dam final cost at $211m after being ‘plagued with challenges’

Friday, 17 January 2025

The final cost of the Waimea Dam is $211 million, after the end of a lengthy and costly dispute process that tacked an estimated extra $12m on to the project.

The dam has cost more than double its initial 2019 price tag of $104m.

In a statement this week, Waimea Water Ltd advised that its contractual disputes with the dam construction contractor had been “amicably settled and dispute proceedings ceased between the parties”.

The joint-venture contractor Fulton Hogan Taylors JV started adjudication proceedings in February 2022 against the council-controlled organisation under the Construction Contracts Act 2002.

The dispute stemmed from a disagreement over an independent engineer's decision, and resulted in an estimated $12m being attributed to payments to the joint-venture contractor or legal costs.

Tasman mayor Tim King said he was “relieved” the dam was finished and the cost finalised.

The project was “plagued with challenges” right from the start, from the Pigeon Valley fire putting a halt to construction, through to the Covid-19 pandemic, geological issues, and cost pressures, he said.

At a Tasman District Council meeting in November when the $211m figure was put forward, councillor Mark Greening described the nearly $4m cost increase, from the $207.5m price tag reported in September, as “staggering”.

In the meeting, WWL chief executive officer Mike Scott said that cost reflected the incremental legal cost for arbitration.

In July it emerged that an adjudicator’s decision in favour of the contractor was going to hike up the dam’s projected cost to the tune of $8.3m, which raised the total at the time to $206.5m.

A subsequent payment to the contractor, required as a consequence of the disputes process, grew the dam’s estimated cost a further $1m.

Other factors that augmented costs included the area’s encountered geology ($43m), mechanical and electrical costs of $31.3m, $9.3m from the adjudication determination, and other costs of $33.3m which were “either underbudgeted or not contemplated at project funding”, according to a WWL report.

Scott acknowledged that construction of the dam had been a difficult project during a challenging time.

While he appreciated that the cost of water security was “a lot for our small community”, the dam would benefit many generations to come.

Ben Hayward, speaking on behalf of the Fulton Hogan Taylors JV, said the contractors were pleased the dispute proceedings had come to an end and the project finished.

Now that the dam was complete, “we can look back with pride on we have achieved and the flow on benefits to the region’s future prosperity”, Hayward said.

In March and April 2024, a fifth of the reservoir was released to avoid severe water restrictions that Scott said would have “otherwise severely impacted residential water supply, shut down some industries, and impacted food production and exports”.

“It would have had a significant impact on both the economy and river health. The dam is doing its job,” he said.