More fractured rock, inflation add millions to Waimea dam project

Friday, 9 July 2021

The Waimea Community Dam build in the Lee Valley, pictured in April, is now expected to be completed in mid-2022.

The discovery of more highly fractured rock coupled with “unprecedented” inflation has added millions of dollars to the expected cost of the Waimea dam project.

Waimea Water Ltd chief executive Mike Scott on Thursday told Tasman District councillors the forecast cost to complete the dam was now closer to $164 million.

“Based on what we know right now, based on the known conditions, we anticipate our costs being between what we told you last time and the upper end of the risk range – so between $158m and $164m and probably trending towards the upper end,” Scott said.

Waimea Water is a council controlled organisation that is responsible for managing the construction, operation and maintenance of the dam in the Lee Valley, about 36km south-east of Nelson. It is a joint venture between Tasman District Council and Waimea Irrigators Ltd.

Waimea Water chief executive Mike Scott, pictured speaking to councillors in February about the dam project, has again fronted up to outline challenges with the build.

* Nelson City Council to pay $5m to Waimea dam project, no more expected

* Waimea Water outlines more drivers for dam price hike

In February, Scott revealed a $29m blowout in the project, taking the forecast cost to complete the dam to $158.4m. The previous estimate of $129.4m was already $53.5m above a forecast of $75.9m that went out for public consultation in October 2017 and $25m more than a $104.5m estimate at the time the decision to proceed was finalised in 2018.

As he presented the new $158.4m figure in February, Scott said he recognised “residual uncertainty” such as the Covid-19-affected supply chain and the geology at the site, so he provided an expected range for that final cost of between $148m and $164m.

An early impression of how the completed Waimea dam is expected to look with the spillway on the right.

On Thursday, Scott said the geology on the left-hand side had “not been kind to us and has posed some real challenges”.

As the overburden was pulled back over the past month or two, “we have experienced highly fractured rock on the left-hand side and encountered shear zones that no-one really knew about”.

Scott described shear zones as areas of ground rock and clay matter. One shear zone was 4.5m wide.

“We're going to have to bisect right through the top of the spillway,” Scott said. “We're going to have to remove it, treat it and engineer a solution to properly found the spillway foundation, and seal the substrata,” Scott said. “So it's an unexpected cost burden to us.”

In response to questions from councillor Chris Hill around whether the shear zone could have been picked up by one of the test bores, Scott said there was a bore just 5m to 6m from the site.

“But, realistically you could put in any number of bores and still not hit it.”

The shear zones meant Waimea Water had to “increase the amount of flow-preventing material to treat these defects”.

“That means we're having to import more sand,” Scott said, adding that there was stress on supplies around the region. “We are very worried about sand supply.”

The latest geological challenges with the highly fractured rock had “eaten up a lot of the unallocated contingency and remains a risk”.

Waimea Water chief executive Mike Scott outlines the progress with the construction of the Waimea Community Dam from the build site in the Lee Valley. Video first published on April 8, 2021.

'Unprecedented” inflation pressure was the other challenge driving up costs, Scott said.

Since February, there had been construction inflation of between 20 per cent and 30 per cent. Iron ore had risen by a whopping 80 per cent since the start of the year, which flowed into products such as stainless steel and finished steel, up 40 to 60 per cent.

“At the same time, freight costs had increased 200 to 300 per cent,” Scott said, explaining that was due to international freight costs.

The dam was about 60 per cent complete with most of the foundations now “largely exposed”.

Heavy rain over 48 hours in April had flooded the site, submerging the large culvert.

“We had 4.6 million cubic metres of water flow through the dam site … which is one-third of the reservoir, so we would have filled one-third of the reservoir in 48 hours,” Scott said. “It’s a great site for a dam.”

While flooding was expected during the construction of the dam and measures were in place to mitigate any effects, the April event had caused a delay and the project was now about “eight months behind where we thought we'd be when we started”.

Construction was now expected to be completed in mid-2022 followed by filling the reservoir. The dam was expected to be commissioned in December 2022.

Councillor Dean McNamara said December was “cutting it fine” for water users who may need it for summer 2022-23.

Scott said the flow to the river could be moderated via a temporary pipe before the dam was commissioned.