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Dams, dam costs and damnable cost overruns

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DOI: 10.1016/j.hydroa.2019.100026

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 Journal of Hydrology X 3 (2019) 100026

Contents lists available at ScienceDirect

Journal of Hydrology X
journal homepage: www.elsevier.com/locate/hydroa

Research papers

Dams, dam costs and damnable cost overruns

C. Petheram a,⇑, T.A. McMahon b
a
CSIRO, GPO Box 1700, Canberra, ACT 2601, Australia
b
Department of Infrastructure Engineering, School of Engineering University of Melbourne, Victoria 3010, Australia

a r t i c l e i n f o a b s t r a c t

Article history: Major restructuring including commercialisation of the water authorities in Australia during the past sev-
Received 10 February 2018 eral decades has resulted in the loss of much valuable information on dam infrastructure costs. This paper
Revised 7 February 2019 sets out to provide an Australian perspective on dam costs and dam cost overruns, examine patterns of
Accepted 8 February 2019
dam costs and cost overruns, and develop a good predictor of costs and cost overruns for the Australian
Available online 13 February 2019
situation.
Several cost metrics, dam costs and related data, were collated for 98 dams constructed across Australia
Keywords:
since 1888. Dam costs, operation and maintenance (O&M) costs, and construction overrun costs were
Operation and maintenance cost
ANCOLD
related to independent variables including dam site terrain characteristics and catchment and climate
Water resource management attributes. Each metric was related through multiple regression to mainly physical and climate attributes
Reservoir yield associated with the dam. Multiple correlation coefficients account for between 50% and 80% of the vari-
Multiple regression ance in the dependent variable. The exceedance range (defined as 75% exceedance to 25% exceedance) of
Water supply final dam costs (2016 AUD) (98 dams) is from $393 per ML of reservoir storage to $2040 per ML. Annual
O&M costs (33 dams), expressed as a % of final dam cost, varies from 0.14% to 0.35%, though these O&M
costs do not include major upgrades. The results of this study of Australian dams are in keeping with
international studies that have found the estimated costs of large infrastructure projects are systemati-
cally biased downwards. In this study the median and mean cost overruns (40 dams), expressed as a per-
centage of the dam cost estimated immediately prior to construction, are 49% and 120% respectively with
the smallest and largest cost overrun values being 48% and 825% respectively. Based on the available
data dam cost overruns appear to be more prevalent in sedimentary rock than hard rock (e.g. igneous
and metamorphic rocks) settings. The strong likelihood of dam cost overruns occurring has implications
to forecasted benefit-cost ratios, and supports assertions that large dam cost and contingency estimates
should be checked at pre-feasibility and feasibility stages by an independent organisation and by persons
highly experienced in dam design, construction and costing.
Crown Copyright Ó 2019 Published by Elsevier B.V. This is an open access article under the CC BY license
(http://creativecommons.org/licenses/by/4.0/).

1. Introduction sub-tropical climate has ever made significant economic progress

Following a brief hiatus in the late twentieth century, there has
been a resurgence of interest in the construction of large dams for
energy (Biswas, 2012; Zarfl et al., 2015) and food production (PMC,
2015), particularly in developing and emerging economies
(McMahon and Petheram, submitted). In Australia, and particularly
in the tropical and sub-tropical north of the continent, the primary
driver for government’s interest in large dams is regional economic
development in this sparsely populated region (PMC, 2015). How-
ever, debate around the costs and benefits of large dams continues.
Some observers point out that no country or region in a tropical or
⇑ Corresponding author.
E-mail addresses: cuan.petheram@csiro.au (C. Petheram), thomasam@unimelb.
edu.au (T.A. McMahon).
without adequately harnessing it’s water resources (Biswas,
2012). On the other hand, critics of large dams point to the high
direct costs of constructing large water infrastructure projects
and the unpredictable and difficult to quantify indirect environ-
mental and social costs that may result.
Another criticism of large dams, and large infrastructure pro-
jects in general, is that they often result in large cost overruns
(e.g. Pickrell, 1990; Fouracre et al., 1990; Skamris and Flyvbjerg,
1996; Ansar et al, 2014; Terrill et al., 2016), with a number of
authors concluding that estimated values were significantly biased
below actual values (e.g. Bacon and Besant-Jones 1988, Ansar et.
al., 2014). For example, in a summary of cost overruns in large
infrastructure assets from non-Australian countries, Ansar et al.
(2014) reported the mean cost overruns for construction projects
of roads (at 20%), bridges and tunnels (34%), rail (45%), mega dams

https://doi.org/10.1016/j.hydroa.2019.100026
2589-9155/Crown Copyright Ó 2019 Published by Elsevier B.V.
This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
2 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026

(96%) and nuclear power plants (207%). Odeck and Skjeseth (1995) ‘Reservoir’ is reserved for the water body upstream of the dam
observed that the uncertainties inherent in cost estimates are wall. ‘Reservoir capacity’ is used to describe the volume of the
rarely brought to the attention of decision makers even as a sensi- water body upstream of the dam wall at the full supply level
tivity analysis. (FSL) and ‘dam volume’ refers to the volume of material (e.g. con-
Information on dam costs and on dam cost overruns are not crete, earth, rock) within the dam wall. In this paper the term ‘cost
readily available in Australia. Major restructuring including com- overrun’ refers to the percentage difference between the actual
mercialisation of the water authorities in Australia during the past cost of a dam and it’s publically stated or contracted cost immedi-
several decades has resulted in the loss of much useful information, ately prior to construction. For example, if a dam was estimated to
including infrastructure costs through being mislaid or deliberately cost $100 million, but actually cost $150 million, the cost overrun
disposed of. The aim in publishing this paper is to provide an Aus- would be 50%.
tralian perspective on dam costs and dam cost overruns, to examine
patterns of dam costs and cost overruns, and to develop a good pre-
2. Data
dictor of costs and schedule overruns for the Australian situation.
This study, essentially about dam costs and related project
Data for the analyses described in this paper were obtained
information, was initiated over 40 years ago, when data on costs
from several sources. A major source of information about dam
of Australian dams were acquired through written correspondence
costs and other project information was collected in the mid-
with water authorities and other relevant government agencies
1970s. This information was acquired through written correspon-
around Australia. Those data were supplemented by an additional
dence to 23 water authorities and other relevant government
survey in 2012. In this paper we examine the relationships
agencies around Australia (for 72 dams). Those cost data were sub-
between dependent variables of dam costs, cost overruns and
stantially enhanced with the inclusion of data from Frecker (1969)
operation and maintenance costs (O&M) and independent vari-
(9 sites) and additional material in 1974 (6 sites). In 2012 an addi-
ables. One difference between this paper and previous cost-
tional survey was conducted of 53 relevant Australian authorities,
related papers is that the previous papers (mostly in the economic
17 of which provided additional data (46 sites). (Survey questions
literature) have tended to focus almost exclusively on predictive
are provided in Table S3 of the Supplementary Material). These
factors related to technology, size, procurement and country eco-
data have been collated with data on dam dimensions, storage
nomic performance (e.g. Bacon and Besant-Jones 1998), while this
capacity and spillway size, which are documented in a database
paper also explores the influence of a wide range of climate,
maintained by the Australian National Committee on Large Dams
hydrology, geology, and landscape related factors on water infras-
(ANCOLD) (ANCOLD, 2010), along with dam-site terrain data,
tructure project costs and cost overruns in Australia. Building on a
catchment and climate attributes and related hydrologic informa-
preliminary analysis by Petheram and McMahon (2012) we have
tion that were calculated for each site as part of this analysis. The
collated a unique data set that has dam costs and related data
list of non-cost variables used in the regression analysis, totalling
along with reservoir features, terrain information at the dam-site,
132, is provided in Supplementary Table S1.
catchment and climate attributes.
The dam costs were adjusted to 2016 costs in Australian $s
The foci of this paper are the costs (capital, overrun and annual
using the Australian Bureau of Statistics (ABS) consumer price
O&M) of Australian dams and their relationships to dam and reser-
index (CPI) from 1948 to present. Prior to 1948 we adopted annual
voir features, to at-site terrain characteristics, and to catchment
inflation rates based on derived relationship between the Aus-
and climate attributes.
tralian and United States (US) CPI values. (Australian and US CPI
Specifically the objectives of the current paper are to:
values tracked very similarly from 1948 to the present;
R2 = 0.99). Where the construction length was 6 years and the
I. Examine patterns of dam capital cost, cost overrun and
annual cost expenditure data were unavailable (17 dams), it was
annual O&M costs in Australia.
assumed (for the purposes of applying inflation factors) that three
II. Develop regression relationships for predicting dam capital
quarters of the expenditure occurred in the middle 50% of years of
cost, cost overrun and annual O&M costs; and provide guid-
construction, and the remaining 25% of expenditure occurred in
ance on the utility of regionally based regression relation-
the first and last 25% of years. This assumption was based on anal-
ships elsewhere in the world, and on which variables are
ysis from five dams for which annual expenditure data were
likely to explain the most variance.
available.
An alternative to using CPI for indexing dam construction costs
Following this introduction, the data used in the paper are
is to use a construction specific index. However, relevant construc-
described in Section 2 which is followed by Section 3 that provides
tion based indices published by the ABS, namely the ‘Australian
background information explaining some features of dam develop-
heavy and civil engineering construction Australia’ and ‘Australian
ment in Australia. Patterns and simple relationships relating to
road and bridge construction’ only exist since 2007 and 1997
dam costs in units of 2016 AUD (Australian $), $ per ML (where
respectively, and consequently could only be applied to less than
ML = 103 m3) reservoir storage, $ per ML reservoir yield, cost over-
5% of the 98 dams with cost data. Nevertheless, the choice of index
runs and O&M costs, are discussed in Section 4. In Section 5 we dis-
may be inconsequential for this analysis where costs extend back
cuss the development of regression models to estimate dam costs
many decades. In an analysis of Australian and international
and related variables. Some conclusions are drawn in Section 6.
indices GHD Meyrick (2011) found that over the long term (i.e.
The Supplementary Material shows a List of Symbols (Table S1),
decades) increases in construction costs have not exceeded general
the full expansion of the Köppen-Geiger climate classification
inflation, although there were short periods of several years where
abbreviations (Table S2) and lists the survey questions (Table S3).
construction costs exceeded general inflation and vice versa.
There are also four charts showing the relationship between year
of completion and (i) dam height (Fig. S1), (ii) dam volume
(Fig. S2), (iii) reservoir volume (Fig. S3) and (iv) reservoir volume 3. Background information
divided reservoir surface area (Fig. S4). A spreadsheet of primary
variables is also provided in the Supplementary Material. From an initial data set of 564 ANCOLD dams and 133 dams for
We have adopted the word ‘dam’ herein to include the dam which we had some cost information, we considered four data sets:
wall, primary and secondary spillways and outlet structures. first, 224 dams with reservoirs 10 GL in capacity for which dam-
 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026 3

site terrain, catchment and climate attributes were accessible; sec-
ond, 98 dams of the 224 for which capital cost data were available;
third, 40 dams of the 98 for which cost overrun data were avail-
able; and fourth 33 dams of the 98 for which annual O&M cost data
were available. Table 1 provides a summary of the key data used in
these analyses. The exceedance range, which is defined in this
paper as 75% exceedance to 25% exceedance, of final dam costs
(2016 AUD) is $51 m to $209 m or in terms of cost per unit reser-
voir capacity $393 per ML to $2040 per ML. Annual O&M costs (33
dams) expressed as a % of final dam capital cost varies from 0.14%
to 0.35%. The exceedance range of cost overruns (40 dams) varies
from 20% to 131% with the smallest and largest values being
respectively 48% and 825% respectively. For the 224 dam data
set, the exceedance range of dam heights is 24 m to 56 m and
the range of reservoir volumes is 23 GL to 190 GL.
The locations of the 224 dams with reservoirs 10 GL in capac-
ity are identified in Fig. 1 along with the locations of the 98 dams
with capital cost data and 40 dams with cost overrun data. In Fig. 2
the cumulative number and cumulative reservoir capacity of the
98 Australian reservoirs examined in this study are plotted against
year of completion. For comparison, the cumulative number of
dams against year of completion of the larger data set of 224 reser-
voirs in Australia is also shown.
Two other relevant pieces of background information are the
purposes of the reservoirs and the types of dam wall. The two
major purposes of Australian reservoirs, examined in this analysis
of 98 reservoirs, are for water supply (residential, commercial and
industrial) at 57% and irrigation at 33% and, by reservoir capacity,
68% is for irrigation and 19% for water supply. 8% of reservoirs and
13% of reservoir capacity are used for hydropower. Dams con-
structed as rock embankments account for 42% by number and
56% by reservoir capacity, earth embankment dams account for
29% by number but 26% by reservoir capacity, and concrete
gravity dams account for 22% by number and 17% by reservoir
capacity.
4. Dam costs
4.1. Dam capital costs
In Fig. 3 the relationship between the final capital costs (2016
AUD) of dams (including spillways and related infrastructure)
and (a) dam wall volume and (b) dam height for different dam
types is examined. Categorising the data by dam type resulted in
a considerable improvement in the relationship over that using
all dams (R2 (multiple correlation coefficient) of 0.37) when dam
cost is related to dam volume (Fig. 3a) but not when dam cost is
related to dam height (Fig. 3b). The relationships between dam
cost and dam volume for concrete arch, concrete gravity, rockfill
embankment and earth embankment dams had R2 of 0.69, 0.58,
0.63 and 0.42 respectively. Concrete is a more expensive construc-
tion material than rockfill, which in turn is more expensive than
earthfill. Concrete arch dams, when suitably sited, require less con-
crete than an equivalent concrete gravity dam (Gehin, 1961) but
require more formwork and of greater complexity and, conse-
quently, have higher labour requirements. These patterns are
reflected in Fig. 3.
The relationship between the final costs (2016 AUD) of dams
and reservoir capacity is moderately strong (R2 = 0.53, n = 98) (n
is sample size) (Fig. 4). Categorising the dams by reservoir primary
purpose strengthened the relationship for those dams which are
primarily used for irrigation (R2 = 0.77, n = 32), but weakened the
relationship for dams whose reservoirs’ primary purpose was
hydro-power generation (R2 = 0.27, n = 8) and water supply
(R2 = 0.32, n = 56). The wide variation in results of water supply
reservoirs is likely because other factors strongly influence the cost
effectiveness of a site. For example, water supply reservoirs are
generally sited in close proximity to the demand (particularly if
the water is to be piped to maintain water of high quality), and that
site selection may be constrained by urban and industrial develop-
ment. There are likely to be fewer constraints on the siting of

Table 1
Summary of key data comparing 98 dams analysed herein compared to the larger primary data set (224).

Variable Number Min. 75% Median 25% Max.

Catchment area (km2)à 224 0.06* 88 323 1299 139,109
98 0.06* 132 380 1436 139,109
Mean annual catchment rainfall (mm/year) 224 221 750 961 1308 3177
98 223 769 987 1223 1976
Mean annual runoff (mm/year) 223 2.1 82 203 426 2490
97 39 87 211 401 791
Catchment aridity index (mean annual rainfall/mean annual potential evapotranspiration) 224 0.15 0.57 0.79 1.12 3.85
98 0.15 0.61 0.78 1.03 1.70
Catchment slope mean (%) 220 0.11 4.0 6.5 11.3 19.6
97 1.0 4.2 6.9 11.2 19.6
Dam height (m) 223 7 24 42 56 180
97 10 37 47 67 180
Dam length (m) 219 95 266 417 795 8670
94 95 297 440 872 8670
Reservoir capacity (106 m3 or GL) 224 10 23 53 190 12,359
98 10 28 77 309 5641
Res. vol./mean annual flow 177 0.04 0.5 1.3 2.5 29.4
86 0.05 0.5 1.3 2.3 8.1
Reservoir surface area (103 m2) 220 700 2935 5610 18,038 980,000
97 700 2850 7500 28,700 980,000
Final cost (2016) ($m) 98 17 51 86 209 1277
Final cost (2016)/reservoir capacity ($/ML) 98 48 393 981 2040 17,591
Final cost (2016)/reservoir yield ($/ML) 89 39 669 1304 2557 43,940
Annual O & M (% of final cost) 33 0.08% 0.14% 0.21% 0.35% 0.86%
Cost overrun (% of initial estimate) 40 48% 20% 49% 131% 825%
Years to complete construction 62 1.0 3.0 4.5 9.8 46.0
à
For variable with two rows of data, the upper row are the characteristics of the primary data set (up to 224 sample size) whereas the lower row is for the dams with cost
data (up to 98 sample size).
*
These small catchment areas are for off-stream storages.
4 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026
Fig. 1. Location of the 224 dams with reservoir capacity 10 GL and the 98 dams with capital cost data and the 40 dams with cost overrun data.
Fig. 2. Cumulative number and cumulative reservoir capacity of the 98 Australian
reservoirs (for which cost data are available) plotted against year of completion and,
for comparison, the cumulative number of dams against year of completion of 224
large reservoirs in Australia.
reservoirs for which the primary purpose is irrigation. Dams can be
placed at a suitable location at a considerable distance upstream of
the proposed irrigation area and water run down the river to the
point of extraction. Consequently, it is thought that the strong rela-
tionship is more likely to be due to what is considered an accept-
able cost for storing a given volume of water for irrigation
purposes than the effect of reservoir capacity on dam cost. The
wide variation in the costs of water supply dams is indicative of
the capacity of urban and industrial users to pay a higher price
for water and a political willingness to fund water infrastructure
to ensure the water security of urban users than for irrigation
users. This is likely to be the reason for the weak correlation
between unit cost and distance from a capital city shown in
Fig. 5 despite higher costs associated with remoteness, such as
labour, expertise and lack of existing infrastructure. Further cate-
gorising those dams whose reservoirs’ primary purpose is irriga-
tion by dam type (not shown) slightly improved the R2 of the
dam cost to reservoir capacity relationship (R2 = 0.77, n = 32) for
earthfill embankment dams (R2 = 0.83, n = 9), but weakened the
relationship for rockfill embankment dams (R2 = 0.71, n = 15) and
concrete gravity dams (R2 = 0.68, n = 6).
Two important cost metrics are dam cost per unit of reservoir
storage capacity and dam cost per unit of reservoir yield; both met-
rics allow comparisons to be made across different reservoir capac-
ities. To do this, we use $/ML. Fig. 6a shows the relationship
between dam cost per ML storage (98 dams) and reservoir capacity
(ML) is relatively strong (R2 = 0.64). In Fig. 6a (and later plots),
reservoir yield (ML) for 85% annual time-based reliability was cal-
culated for each reservoir (89 reservoirs) using a behaviour analy-
sis with 115 years of modelled daily inflows generated using 0.05°
by 0.05° gridded runoff data obtained from Petheram et al., 2012
and Vaze et al., 2013 and incorporating Morton’s lake evaporation
(McMahon et al., 2013). (An explanation of the application of prob-
ability analysis to reservoir yield estimation can be found in
McMahon and Adeloye (2005)). In Fig. 6a, the relationship involv-
ing dam cost per ML yield, which for practical purposes is more
useful than ML of storage, is much weaker (R2 = 0.15) than
observed between dam cost per ML storage and reservoir capacity
(R2 = 0.64). The poor relationship is likely to be because reservoir
capacity is not always a good indicator of yield; small capacity
weirs and dams may be low-yielding if sited in small headwater
catchments or relatively high yielding if sited on a large river,
which is continually replenished. Categorising the dam cost per
ML storage capacity data by reservoir primary purpose (Fig. 6b)
improved the relationship between $/ML storage and reservoir
 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026
Fig. 3. Relationship between final dam costs (2016AUD) and (a) dam volume (94 dams) and (b) dam height (96). Numbers in parenthesis are the R2 values of the
relationships. For all dams the cost – volume and cost – height relationships have R2 of 0.36 and 0.37 respectively.
Fig. 4. Relationship between final dam cost (2016AUD) and reservoir capacity (98
dams).
Fig. 5. Relationship between final dam cost (2016AUD) per ML reservoir storage
capacity and distance of dam site to nearest capital city (98 dams).
capacity for irrigation (R2 = 0.72) and hydropower (R2 = 0.77) dams
but not water supply dams (R2 = 0.50). In Fig. 7, final dam cost per
unit storage is plotted against reservoir surface area, exhibiting a
strong relationship of R2 = 0.67. It also has a small SEE (standard
error of estimate) of 0.28 log units.
The next figure explores the relationship between final dam
cost per unit storage and the year of completion of construction
(Fig. 8). Fig. 8 suggests that unit costs (i.e. $/ML storage) in the
dam construction industry (adjusted for inflation) have changed
5
little over time. This observation is somewhat counter-intuitive
because the introduction of new and better technology, methods
and materials had the effect of making dams cheaper. For example,
in the 1950s the introduction of large earth-moving equipment
reduced the relative cost of embankment dams (Doherty, 2000,
Chapter 3), and with the introduction of pre-stressed concrete
gravity dams in the 1960s and, particularly, with the introduction
of roller compacted concrete dams in Australia in the 1980s, con-
crete gravity dams became cost effective again, despite the high
price of concrete (Doherty, 1999, Chapter 4). However, from
Fig. 8 it would appear that those factors contributing towards mak-
ing the construction of dams less expensive than previously were
overly compensated by factors making them more expensive.
These are likely to include an increase in the cost of labour, an
increased consciousness of dam safety (Doherty, 1999, Chapter
4), an increase in costs associated with environmental approvals,
construction health and safety, and simply by virtue of the fact that
the best dam sites were developed first and that with growth in the
Australian population sometimes better dam sites have to be dis-
counted because substantial development has occurred in the
reservoir footprint.
The relationships between dam costs per ML of storage and dam
costs per ML of yield and catchment area are explored in Figs. 9 and
10 respectively.
The relationship with yield is the stronger regression (Fig. 10),
but that accounts for only 45% of the variance. Intuitively, this is
sensible because with the exception of those dams built for flood
control, water infrastructure planners and engineers plan and
design water storage infrastructure on the basis of how much
water they can supply or yield, not how much they can store,
and yield is moderately strongly correlated to catchment area
(R2 = 0.57, n = 200), reservoir capacity is less so (R2 = 0.09, n = 213).
The final costs of dams per ML storage and per ML yield sam-
pled by reservoir primary purpose and dam type are provided in
Tables 2 and 3 respectively. For hydropower, irrigation and water
supply (Table 2) for which there are sufficient reservoirs to allow
a comparison, the median costs are respectively 1565, 472 and
1278 $/ML of storage and 780, 846 and 1616 $/ML of yield. For
hydropower dams in Australia the median $/ML of storage is
higher than the median $/ML of yield because the majority of the
reservoirs are within-year storages. Of the 98 (224) dams exam-
ined, 8 (41) have hydropower listed as their primary purpose. Of
the 8 (41) dams approximately 75% (80%) have a standardised
net inflow greater than the coefficient of variation of annual inflow
(see McMahon et al., 2007), and hence are classified as being
within year storages, compared to about 35% (35%) for reservoirs
with a primary purpose of irrigation and 40% (35%) for reservoirs
with a primary purpose of water supply. Relative to the capacity
6 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026

Fig. 6. Relationships between final dam cost (2016AUD) per ML storage and per ML yield related to reservoir capacity (98 and 89 dams respectively) a) Cost per ML storage
and per ML yield b) Costs stratified by purpose of dam.

Fig. 7. Relationship between final dam cost (2016AUD) per ML reservoir storage Fig. 9. Relationship between final dam cost (2016AUD) per ML reservoir storage
capacity and reservoir surface area (97 dams). capacity and catchment area (95 dams).

Fig. 10. Relationship between final dam cost (2016AUD) per ML reservoir yield and
Fig. 8. Relationship between final dam cost (2016AUD) per ML reservoir storage catchment area (89 dams).
capacity and year of completion (98 dams).

of irrigation reservoirs (median capacity of 312 GL, n = 32) the
capacity of hydropower reservoirs is smaller (median capacity of
40 GL, n = 8). Furthermore due to the need for high dam walls,
hydropower dams in Australia are mostly located in the mountain-
ous headwater catchments of Tasmania (71% of the 41 hydropower
dams) and the Australian Alps (22%) where the dams are sited on
rivers with a lower inter-annual variability of streamflow than
elsewhere in Australia and which continuously replenish the reser-
voir for longer periods each year (which means the yield can be
higher than the storage capacity). In Table 3 the median unit costs
of storage of concrete arch dams are tabulated as $2153/ML com-
pared to $1064/ML for earth embankments, $977/ML for rock
embankments and $624/ML for concrete gravity. The median costs
per unit yield of earth embankment dams are listed as $1651/ML
compared to rock embankments at $1506/ML. The median unit
cost of concrete gravity dams is approximately half ($791/ML).
Interestingly, the gradient and intercept of the trend lines
for $/ML yield versus catchment area (for all dams $/ML
yield = 21008*catchment area 0.437 R2 = 0.45) are similar for earth
 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026 7

Table 2
Number of dams and final cost (2016 AUD) per ML reservoir storage capacity and per ML yield sampled by purpose.

Flood control Hydropower Irrigation Recreation Water supply

Cost $/ML storage capacity
Number of dams 1 8 32 1 56
Minimum na 131 48 na 152
75% exceedance na 299 303 na 677
50% exceedance 2300 1565 472 1680 1278
25% exceedance na 6273 1038 na 2436
Maximum na 17,591 3748 na 10,903
Cost $/ML yield
Number of dams 1 7 30 1 49
Minimum na 179 100 na 39
75% exceedance na 314 580 na 906
50% exceedance 10,197 780 846 616 1616
25% exceedance na 2670 1689 na 3741
Maximum na 5302 8651 na 43,940

Table 3
Number of dams and final cost (2016 AUD) per ML reservoir storage capacity and per ML yield sampled by dam type.

Rock embankment Concrete gravity Earth embankment Concrete arch

Cost $/ML storage
Number of dams 41 22 28 7
Minimum 48 152 92 398
75% exceedance 359 329 589 1054
50% exceedance 977 624 1064 2153
25% exceedance 1865 1627 2570 2802
Maximum 17,591 5784 7201 3496
Cost $/ML yield
Number of dams 37 22 23 7
Minimum 100 39 158 545
75% exceedance 775 559 982 1003
50% exceedance 1506 791 1651 1595
25% exceedance 3195 2533 2670 5245
Maximum 13,550 9487 43,940 9834

embankment, rockfill embankment dams and concrete gravity Table 4

dams (Fig. 10). Based on these observations one potential explana- Median, mean and range of final dam costs per ML reservoir storage capacity ($/ML)
sampled by lithology.
tion for the low median unit cost of concrete gravity dams relative
to earth and rockfill embankment dams is because concrete gravity Final dam costs
dams have a larger median catchment area (1287 km2) than earth- Lithology Number of Median $/ML of Mean $/ML of
fill (325 km2) and rockfill (891 km2) embankment dams and, as dams reservoir storage reservoir storage
discussed earlier, yield is moderately strongly correlated with Regolith 11 529 (177–1268)* 971
catchment area. Concrete gravity dams with a central overflow Sedimentary 45 1237 (470–3075) 1800
spillway are generally more suitable for large catchments, where rock#
Hard rockǂ 42 932 (358–1936) 1932
a large spillway capacity is required to discharge flood inflows,
Total 98 980 (383–2277) 1764
than embankment dams. Rockfill embankment dams typically
#
have larger catchment areas than earthfill embankment dams Sedimentary rocks include argillaceous detrital sediment, feldspar or lithic-rich
arenite to rudite, quartz-rich arenite to rudite, sedimentary non-carbonate chemical
because methods have been devised for reinforcing the down-
or biochemical, and sedimentary siliclastic.
stream rockfill slope to protect it from erosion, and indeed several *
The range is defined as 75% exceedance to 25% exceedance.
rockfill dams in Australia have survived overtopping during flood ǂ
Hard rocks include high grade metamorphic, igneous felsic intrusion and regolith,
events with minimal damage (Eagles, 2000). igneous felsic intrusive, igneous felsic volcanic, igneous felsic-intermediate vol-
The median and mean final costs of dams per unit reservoir canic, igneous felsic volcanic igneous intermediate intrusive, igneous intermediate
volcanic, igneous mafic intrusive, igneous mafic volcanic, meta-igneous mafic,
storage capacity sampled by the lithology underlying the dam site
meta-igneous mafic volcanic, metamorphic, metasedimentary carbonate, and
are presented in Table 4. The difference in median and mean values metasedimentary siliciclastic.
is large.

4.2. Dam capital cost overruns
For 40 dams constructed in Australia and over a wide historical
period (built between 1888 and 2012), estimated cost immediately
prior to commencement of construction and final cost were avail-
able. For these dams the median cost overrun is 49% with the
exceedance range being 20% and 131% respectively (Table 5). The
overall range varies from 48% to 825%. The mean cost overrun
of all 40 dams is 120%. Sampled by dam type the largest median
percentage cost overruns are recorded for earthfill embankment
dams. From Table 5 it is also observed that the median and mean
dam cost overruns for sedimentary rock are about 1.6 and 3.2
times respectively the cost overruns in hard rock settings.
4.3. Other cost related features
As expected, annual O&M costs increase as the capital costs of
dams increase. As a percentage of capital costs, the median annual
O&M cost is 0.21% with an exceedance range of 0.14% to 0.35%
(based on data for 33 dams) (Table 1). In most but not all cases,
8 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026

Table 5
Dam cost overrun sampled by lithology, dam type and primary purpose.

No. Mean cost overrun (%) 75% exceedance cost overrun (%) 50% (median) cost overrun (%) 25% exceedance cost overrun (%)
Lithology
Regolith 7 149% 3% 40% 143%
Sedimentary# 19 161% 45% 59% 172%
Hard rockǂ 14 49% 15% 38% 73%
Dam type
Earth embankment 8 161% 42% 106% 173%
Rockfill embankment 18 143% 6% 38% 137%
Concrete gravity 11 67% 22% 49% 74%
Concrete arch 3 59% NA 57% NA
Primary purpose
Irrigation 14 222% 12% 101% 270%
Hydropower 2 13% NA 13% NA
Water supply 23 87% 30% 50% 94%
All dams 40 120% 20% 49% 131%
#
Sedimentary rocks include argillaceous detrital sediment, feldspar or lithic-rich arenite to rudite, quartz-rich arenite to rudite, sedimentary non-carbonate chemical or
biochemical, and sedimentary siliclastic.
ǂ
Hard rocks include high grade metamorphic, igneous felsic intrusion and regolith, igneous felsic intrusive, igneous felsic volcanic, igneous felsic-intermediate volcanic,
igneous felsic volcanic igneous intermediate intrusive, igneous intermediate volcanic, igneous mafic intrusive, igneous mafic volcanic, meta-igneous mafic, meta-igneous
mafic volcanic, metamorphic, metasedimentary carbonate, and metasedimentary siliciclastic.

organisations provided O&M costs based on an average of several
years, and did not include major upgrades. An alternative metric
is the O&M annual cost divided by the equivalent annual capital
cost. (For the equivalent annual cost we adopted 7% discount rate
over a 30 year-period.) For the latter metric the median annual
O&M cost is 2.6% with a range of 1.7–4.4%.
5. Regression analyses associated with costs and related
variables
Regression analyses were carried out to examine quantitative
relationships between dam costs, cost overruns, annual O&M costs,
and years of construction and a large set of independent variables.
In total, 141 variables (124 primary variables, 12 secondary vari-
ables and 5 nominal variables), distributed as shown in Table 6,
were used in the analysis. An example of a secondary variable is
dam cost per unit reservoir capacity ($/ML) where the primary
variables are dam cost and reservoir capacity. A spreadsheet of pri-
mary variables are provided in the Supplementary Material.
1. A step-wise regression was applied to all data, and the variables
that were identified were screened for the variance inflation
factor (VIF) which pinpoints collinearity in the independent
variables (O’Brien, 2007). Variables with large VIFs were pro-
gressively eliminated by ordinary least squares (OLS) regression
with the objective of accepting a model within the median
VIF  2 and no independent variables had a VIF value >3. Some
researchers have applied a less restrictive rule (see O’Brien,
2007 for comments) but in adopting the above criterion we
were cognisant of O’Brien’s advice that ‘‘. . .. threshold values
of the VIF (and tolerance) need to be evaluated in the context
Table 6
Number and type of variables used in regression analysis.
Type of variable Cardinal Nominal
Primary Secondary* Total
Cost information 5 2 0 (Equation 1a) is not acceptable.
Dam and reservoir details 10 4 4
Location details 5 0 1
At-site & catchment attributes 28 0 0
Climate/hydrology attributes 76 6 0
Total 124 12 5 reasons Equation 1b is rejected. However, Equation 1c meets our
* VIF, A-D and regression coefficient criteria and is acceptable. Equa-
Secondary variables are derived from primary variables e.g. $/ML of reservoir
storage capacity.
of several other factors that influence the variance of regression
coefficients”. We followed this advice by checking that the
cross-correlation matrices of the independent variables incor-
porated in the adopted regression model were low.
2. Adopting the independent variables from item 1, next a Box-
Cox (B-C) transformation (k) (Box and Cox, 1964) with the B-C
exponent varying from 0 (natural logarithmic transformation)
through 0.5 (square root transformation) and finally to 1 (no
transformation) was applied to the dependent variable.
3. The Anderson-Darling (A-D) statistic (Anderson and Darling,
1952) was checked to ensure the residuals were normally dis-
tributed at a minimum of 0.05 level of confidence.
4. Finally, the p-values of regression coefficients were also scruti-
nised to ensure the regression coefficients were significantly
different from zero at a level of significance of 0.05. Also, the
sign of the regression coefficient was examined to ensure that
the dependent variable increased or decreased as would be
expected in practice.
The results of the regression analyses are summarised in Table 7
under five variables: final dam cost, final dam cost per unit volume
of storage, cost overrun, annual O&M cost, and years of construc-
tion. Equations 1e, 2d, 3c, 4e and 5f are the adopted equations
for the five variables respectively. It should be noted that models
adopted have only a few parameters making it practicable to col-
lect the data needed to make a prediction.
A short commentary on Equations 1a to 1e now follows to explain
our approach in finding the probable best final dam cost model.
Equation 1a is the result of a step-wise regression that sought to
identify which of the independent variables combined through a
multi-linear regression to estimate final dam cost from a sample size
of 83 costs. Eight so-called independent variables were identified by
step-wise regression. VIFs varied from 1.2 to 4.4 with a median value
of 2.3, hence there is evidence of collinearity. A-D statistic is 0.965
where p < 0.014 i.e. p is not greater than 0.05 and hence the residuals
are not normally distributed. The regression coefficients are also
checked for significance and are found to be significantly different
from zero. For reasons of collinearity and non-normality the model
Equations 1b and 1c are also step-wise regressions but incorpo-
rate Box-Cox transformations k = ½ and k = 0 (ln(Cost)), respec-
tively, of the dependent variable, Cost2016. For collinearity
tion 1d is a fourth model that we examined. Here all variables were
 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026 9

Table 7
Regression equations relating cost to catchment, dam and reservoir attributes. (The five adopted Equations 1e, 2d, 3c, 4e, 5f are highlighted.)

# Equation N R2(adj) R2(pred) Sà Comments

1a Cost2016 = 168.8 + 0.1265 ResVolGL – 0.901 MrVBFFocMea 83 78.87 59.48 109.1 Step-wise regression || VIFs*: 1.2 – 4.4 (2.3) ||A-
+ 28.42 SlSD + 3.284 DamHt + 0.0239 DamLeng – 0.000416 ResArea D#: 0.965 (p = 0.014) Residuals: Not normal ||
+ 0.00687 SpillCap – 0.0317 RuAnnSDGL Reg. coeff.+: all p  0.05, except 0.065
1b Cost20160.5 = 2.78 + 0.001695 ResVolGL – 0.02581 MrVBFFocMea 83 80.94 75.06 3.010 Step-wise regression || VIFs 1.2 – 3.8 (2.4) || A-D
+ 0.458 SlSD + 0.1264 DamHt + 0.001082 DamLeng + 0.000203 SpillCap 0.618 (p = 0.104) Residuals Normal || Reg. coeff.:
– 26,817 ProCurvMea + 0.00179 YldAnnT85 + 1.043 RaDaiMea – all p  0.05, except 0.07 & 0.08
0.001076 RuAnnSDGL
1c Ln(Cost2016) = 2.668–6981 ProCurvMea + 0.02244 DamHt + 0.000230 83 72.53 69.59 0.543 Step-wise regression || VIFs: 1.0 – 1.4 (1.1) || A-
DamLeng + 0.000013 SpillCap + 0.000400 YldAnnT85 D: 0.528 (p = 0.173) Residuals Normal || Reg.
coeff.: all p  0.05
1d LCost2016 = 6.07–0.597 L(ProCurvMea + 0.0002) + 1.081 LDamHt 83 77.96 74.78 0.2114 Step-wise regression || VIFs 1.1– 3.1 (1.7) || A-D:
+ 0.3533 LDamLeng + 0.1353 LResVolGL + 0.1367 LRuAnnSDGL + 1.156 0.441 (p = 0.283) Residuals Normal || Reg. coeff.:
LLong all p  0.05, except 0.09
1e Cost20160.5 = 0.17 + 0.800 SlSD 0.01851 MrVBFFocMea 83 79.46 75.03 3.125 Ordinary least squares (OLS) regression || VIFs
+ 0.1141 DamHt + 0.001034 DamLeng 0.000762 RuAnnSDGL (+76%, 1.2 – 2.5 (1.9) || A-D: 0.477 (p = 0.232) Residuals
+ 0.000193 SpillCap + 0.002319 ResVolGL 56%)¤ Normal || Reg. coeff.: all p  0.05, except 0.11
2d LCost2016/MLVol = 3.00 + 1.009 LDamHt + 0.3337 LdamLeng 83 79.45 76.44 0.2114 Step-wise regression || VIFs 1.1 – 3.1 (1.8) || A-D:
0.8469 LResVolGL + 0.1588 LRuAnnSDG 0.796 L(ProCurvMea (+63%, 0.638 (p = 0.093) Residuals Normal || Reg. coeff.:
+ 0.0002) 1.117 LRadAnnP50 38%) all p  0.05, except 0.09
3c ln(O&MCost2016) = 1.534–0.0777 Koppen + 0.002801 Cost2016 30 71.89 63.51 0.4124 Step-wise, then OLS regression || VIFs 1.1 – 1.4
+ 1.214 RuAnnCV (+51%, (median 1.4) || A-D: 0.231 (p = 0.786) Residuals
34%) Normal || Reg. coeff.: all p  0.05
4e ln(OverrunRatio) = 3.021 + 0.05715 YrsConstr + 0.1616 Koppen 32 61.07 45.88 0.4284 OLS regression || VIFs 1.1 – 1.2 (median 1.2 || A-
+ 2.988 RuAnnCorr (+53%, D: 0.627 (p = 0.093) Residuals: Normal || Reg.
35%) coeff.: all p  0.05
5f LYrsConstr = 151.7–51.2 LYrComp + 0.5164 LCost2016 54 49.77 43.90 0.2879 OLS regression || VIFs 1.0 – 1.5 (median 1.3) || A-
1.251 LRaAnnCv + 4.18 LRadAnnP50 (+94%, D: 0.425 (p = 0.306) Residuals: Normal || Reg.
48%) coeff.: all p  0.05,
à
S is in units of the dependent variable; * VIF is Variable inflation factor which is an indicator of co-linearity. We have adopted the arbitrary rule for assuming little co-linearity
if the maximum VIF range 3.0 and the median value (in parenthesis) 2.0; #A-D (Anderson-Darling) test is for normality. We assume the residuals are normally so long as p
>0.05; +We assume the regression coefficients are significant if p 0.05; ¤Values in parenthesis are the standard errors expressed as percentages of the median estimate in
absolute units; Aridity: Mean annual rainfall/mean annual potential evapotranspiration; Cost2016: Final cost of dam and related infrastructure in 2016 AUD; DamHt: Height
of dam (m); DamLeng: Length of dam wall (m); Koppen: Köppen-Geiger climate classification; L: logarithm based 10; Ln: Natural logarithm; Long: Dam wall longitude;
MrVBFFocMea: Mean of 1 km buffer dam wall focal range; O&MCost: Operation and maintenance cost ($/year); OverrunRatio: Ratio of contract price; PresSD: Standard
deviation of Prescott Index (mm0.25); ProCurvMea: Mean profile curvature (radian/m); RaDaiMea: Mean daily rainfall; RuAnnCv; Coefficient of variation of annual runoff;
RadAnnP50: median annual radiation; RadAnnP50: Median annual radiation; ResArea: Surface area of reservoir (103 m2) estimated at full supply level; ResVolGL: Reservoir
volume (GL); RuAnnCorr: Auto-correlation of annual runoff; RuAnnSDGL: Standard deviation of annual runoff (GL/year); SlSD: Standard deviation of slope (%); SpillCap:
Spillway capacity (m3/s); TminAnnP50: Median annual maximum temperature (°C); YldAnnT85: 85% annual time yield (GL/year); YrComp: Year construction finished;
YrsConstr: Number of years to complete construction.

log10 transformed (designated by symbol L) and a step-wise regres-
sion applied to the data. Overall, this model is accepted. All the equa-
tions were revisited manually using OLS regression progressively
removing the variables with the highest VIF which resulted in
accepting the best compromise among R2(adj) and VIF. Finally, a
log10 transformation was applied to the best model in the previous
step which is Equation 1e and is the acceptable model.
The above approach was applied to the other four dependent
variables. Results are provided in Table 7. The final step in the anal-
ysis was to examine the correlation matrix associated with the five
acceptable equations. The matrices, not shown, confirm that the
effect of collinearity in the adopted equations is small. Of the 58
correlations examined between the independent variables only
one exhibited a correlation of >±0.7, two are >±0.6 and four >±0.5.
5.1. Regression results
Equations 1e, 2d, 3c, 4e, and 5f shown in Table 7 are the result of
the regression analysis of 83 sets of data as explained in the pre-
ceding paragraphs. Equation (1e) used to estimate the 2016 dam
cost including infrastructure exhibits a R2(adj) value of 79.5% and
a standard error of estimate of 3.1 units (+76%, 56%). The two
key variables are dam height and reservoir volume which together
account for more than 60% of the variance in total cost. In Equation
2d the same two variables account for most of the variance (71%) in
the cost per ML volume of reservoir storage.
Annual O&M cost relationship is presented as Equation 3c in
which the O&M 2016 equivalent annual cost (in logarithmic space)
is correlated with final capital cost, Köppen climate class and the
coefficient of variation of annual runoff with R2(adj) = 71.9% and
standard error of estimate of 3.1 units (+76%, 56%). The key vari-
able is final capital cost which alone accounts for 47.6% of the vari-
ance in ln(O&MCost2016).
Equation 4e, which describes capital cost overrun, is specified
by years of construction, Köppen climate class and correlation
coefficient of annual runoff with R2(adj) = 61.1% and standard error
of estimate of 0.4284 units (+53%, 35%). The most important
independent variable is years of construction which accounts for
42% of the variance in ln(OverrunRatio). This seems an appropriate
cause-effect in which the additional cost results from additional
years of construction.
In Equation 5f the number of years of construction is related to
the year of construction, final dam cost, the coefficient of variation
of annual runoff, and median annual radiation, all in logarithmic
space. However, year of construction is not a particularly useful
independent variable for predictive purposes. However, when we
remove it from the relationship the R2(adj) drops from 49.8% to
29.0%. As noted below we surmise this time-dependent effect
results from the impact of World War II on the year of construc-
tion. Cost of construction is the most important independent vari-
able accounting for 28.8% of the variance in dependent variable,
the number of years of construction.
6. Discussion of capital cost overrun of dams
Of the 40 dams for which pre and post dam cost estimates were
available, five were within ±10% of the final costs, three had an
10 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026
underrun of more than 10%, and 32 had an overrun of more than
10%. The results indicate that estimations of dam costs in Australia
are systematically biased downwards. These findings are in keep-
ing with studies of large infrastructure projects reported elsewhere
in the world. In fact, the mean dam cost overrun (40 dams) of 120%
calculated in this study is similar to a large international study of
‘mega-dam’ cost overruns reported as 96% by Ansar et al. (2014).
From the literature review, cost overruns in large infrastructure
projects can result from a wide range of factors. Three factors
(length of construction period, subsurface geology, and optimistic
assumptions), reported in the literature, of particular relevance to
cost overruns of large dams are discussed below within the context
of the Australian results.
6.1. Length of construction period
The regression analysis indicated that construction length was
the most important independent variable when capital cost over-
run is the dependent variable. Correlation between cost overrun
and project length has also been made previously (e.g. Odeck
2003, Flyvbjerg et al., 2004, Ansar et al., 2014). Although the rela-
tionship between capital cost overrun and the number of years of
construction for Australian dams is less strong than that observed
by Ansar (2014), there is nevertheless a clear indication of the
effect of long construction periods. Approximately ⅓ of the dams
(12) with cost overrun, length of time for completion, and comple-
tion date data (n = 36) shown in Fig. 11 have construction periods
in excess of 10 years. Of the 12 with excessive construction peri-
ods, five spanned World War II and two began in 1946 when
resources were diverted to the war effort or were initially scarce.
Of the 12 dams with cost overrun >100%, all were completed dur-
ing the period 1952 to 1979 (Fig. 12). The influence of construction
period on cost overrun is likely to be both a cause and an effect,
where a cost overrun has occurred because the project has been
delayed or because of a technical or industrial issue. However, it
is also likely to be because longer projects are more complex and
it becomes difficult to accurately plan many years into the future
(Ansar et al., 2014). Longer projects also tend to be more exposed
to inflationary pressures.
6.2. Subsurface geology
One of the causes of long construction periods and ultimately
cost overruns is likely to be subsurface geological complexities,
with a number of authors (e.g. Bacon and Bessant-Jones (1998),
World Bank (1984), Kucukali 2011) highlighting that construction
projects with a greater exposure to site related risks such as geo-
Fig. 11. Relationship between capital cost overrun (%) and number of years to
complete construction (36 dams).
Fig. 12. Capital dam cost overrun (%) versus the year construction was completed
(40 dams).
logical conditions (e.g. tunnelling, extensive excavation) were
more susceptible to cost overruns. Unfortunately, very few post-
construction reports exist or are publically available, to allow
investigation of the cause of cost overruns and excessively long
construction periods. Nevertheless, by assigning the dams’ broad
geological categories (regolith, sedimentary and hard rock, based
on regional scale geological data) analysis indicates that dam cost
overruns are more prevalent in sedimentary rock than hard rock
settings.
Because 40% of dam failures worldwide are estimated to fail due
of foundation conditions (ICOLD, 1973) and with an estimated
20,000 lives lost due to major dam failures during 20th century
(Jansen, 1980), the consequences of large dam failure are high.
Hence, failure to identify geotechnical deficiencies in the dam
foundations during the planning stages requires such problems
to be addressed during the construction phase, inevitably resulting
in cost overruns. Furthermore, addressing unexpected geotechnical
problems during the construction phase is often done at a higher
expense than if the problems had been identified in the planning
stages (Stapeldon 1984). During earlier times, dams failed due to
a lack of knowledge on part of the builders, but in recent decades
it has usually been an error in omission that has led to failure
(Thomas 1976). A number of authors highlight the importance of
geotechnical assessments during all stages of a dam project (e.g.
Stapledon 1984, Fell et al., 2005).
6.3. Optimistic assumptions
The large unexplained variance in the cost overrun equations
after allowing for the effect of significant factors may in part be
due to the omission of more appropriate dependent variables.
Alternatively it could be that cost overrun is not well predicted
because estimating a final dam cost requires making some
assumptions based on subjective information, and when proposing
a project human nature would tend to result in optimistic assump-
tions (Lovallo and Kahneman, 2003, Meyer, 2014, Sharot, 2011,
Siemiatycki, 2015). Although each optimistic assumption in isola-
tion may seem plausible, in combination with other optimistic
assumptions, collectively they may be unlikely to occur. Examples
of optimistic assumptions in dam construction could be associated
with weather, availability of labour or expertise (or industrial rela-
tions), geology, socio-economic considerations (like inflation,
exchange rates) and approvals.
Based on their analysis some authors take this last point a step
further and implicate manipulated forecasts as a probable cause for
many cost overruns (Wachs, 1990). In concluding a study of 258
 C. Petheram, T.A. McMahon / Journal of Hydrology X 3 (2019) 100026
transportation infrastructure projects from around the world and
over different historical periods, Flyvbjerg et al. (2002) issued a
warning to legislators, administrators, investors and ‘‘members of
the public who value honest numbers”, that reported cost estimates
were often highly and systematically misleading, and that they
should not trust cost estimates and benefit-cost analysis produced
by project promoters.
7. Conclusion
Costs associated with 98 Australian dams and related infras-
tructure, cost overruns, annual O&M costs and years to completion
were collated and subjected to statistical and regression analyses
to explore the key metrics and relationships. The statistical analy-
sis of a variable is summarised essentially in two metrics – the
median and the exceedance range (here defined as 75% exceedance
and 25% exceedance). A set of 138 independent variables were
available consisting of dam and reservoir characteristics, dam site
terrain features and catchment and climate attributes. All costs
are in 2016 AUD.
Final dam costs (98 dams) range from $17 m to $1277 with a
median cost of $86 m. In terms of cost per ML of reservoir storage
capacity, the exceedance range is $393/ML to $2040/ML with a
median cost of $981/ML. An alternative measure of dam and
related infrastructure cost is in terms of cost per ML yield (where
yield is defined as the 85% annual time-based yield based on a daily
time-step behaviour analysis incorporating evaporation). The
exceedance range (89 dams) is $669 to $2557 per ML yield with
a median of $1304 per ML yield.
As a percentage of capital costs, the median annual O&M cost is
0.21% with an exceedance range of 0.14% to 0.35%. The median
annual O&M cost divided by the equivalent annual capital cost is
2.6% with a range of 1.7% to 4.4%
The range of cost overruns expressed as a percentage of the esti-
mated or contracted cost immediately prior to construction, ran-
ged (75% to 25% exceedance) from 20% to 131% with the smallest
and largest values being respectively 48% and 825% respectively.
Our analysis suggests that the number of years of construction is a
major cause of cost overruns and accounts for 42% of the variance
in cost overrun (expressed as a ratio of the estimated cost in loga-
rithmic space). This is likely to be both a cause and an effect, where
a cost overrun has occurred because the project has been delayed
or because of a technical or industrial issue. However, it is also
likely to be because longer projects are more complex and it
becomes difficult to accurately plan many years into the future,
and longer projects tend to be more exposed to inflationary pres-
sures. Based on the available data, dam cost overruns appear to
be more prevalent in sedimentary rock than hard rock settings.
Each dependent variable was related through multiple regres-
sion to mainly physical and climate attributes associated with
the dam and catchment. Regression models were developed using
step-wise and ordinary least-squares regression, testing a Box-Cox
transformation or considering all the variables in logarithmic
space, and adopting the model only if the residuals were normally
distributed, exhibited little collinearity and the regression coeffi-
cients were mainly statistically significant at the 5% level. The
adopted models are listed in Table 7 and show that the multiple
correlation coefficients accounting for between 50% and 80% of
the variance in the dependent variable. Final dam cost and cost/
ML storage were very well modelled with R2(adj) equal to 79%
for both metrics and standard errors of estimate from +63% to
38%. The model for annual O&M cost was also satisfactorily mod-
elled with an R2(adj) equal to 72% and standard errors of estimate
of +51% and 34%. Dam cost overrun was also satisfactorily mod-
elled with regression accounting for 61% of the variance and stan-
11
dard errors being +53% and 35%. The final variable to be
regressed, the number of years of construction, was poorly mod-
elled with R2(adj) equal to 50% and standard errors of estimate
from +94% to 48%. Those variables that explain the largest varia-
tion in the data are listed.
Information on the strongest predictor variables presented in
this paper may be useful to developers, engineers and policy mak-
ers elsewhere in the world who may be seeking to develop their
own regional dam cost relationships.
Declaration of interests
None.
Acknowledgements
Our gratitude goes to three anonymous reviewers for their
helpful comments. The authors would also like to acknowledge
the numerous public and private organisations that provided data
for use in this analysis. The following organisations provided data
in 1976: Bathurst City Council, City of Rockhampton, Department
of Construction (ACT), Department of the Northern Territory, Elec-
tricity Commission, Engineering and Water Supply Department
(SA), Gold Coast City Council, Hydro-Electric Commission, Latrobe
Valley Water and Sewerage Board, Metropolitan Water Sewerage
and Drainage Board (NSW), Metropolitan Water Supply Sewerage
and Drainage Board (WA), Public Works Department (WA) River
Murray Commission, Snowy Mountains Council, State Rivers and
Water Supply Commission of Victoria, Toowoomba City Council,
Water Resource Commission. The following organisations provided
data in 2012: Central Highlands Region Water Corporation, Glad-
stone Area Water Board, Gosford City Council, Goulburn Mulwaree
Council, North East Water, Parkes Shire Council, Port Macquarie
Hastings Council, Queensland Government Department of Environ-
ment and Resource Management, State Water Corporation (NSW),
Salisbury Water, South Gippsland Water, Southern Rural Water,
Stanwell Corporation Limited, Sydney Catchment Authority,
Townsville Water, Water Corporation (WA), Western Water.
Appendix A. Supplementary data
Supplementary data to this article can be found online at
https://doi.org/10.1016/j.hydroa.2019.100026.
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