In the absence of his superior C. A. Collins, Goh initiated substantial planning to address the increasing water consumption in George Town.

Upon reaching maximum capacity, surplus water would be directed through an 850 ft (260 m) long overflow tunnel into a spillway shaft that discharges back into the Ayer Itam River.

[6] Construction of the dam began in 1958 with the clearing of primary and secondary jungle, followed by the installation of a diversion tunnel to redirect the river and facilitate excavation of the riverbed.

[4] The dam cost the George Town City Council an estimated $15.5 million (Malaya and British Borneo dollar), financed through a loan from the Malayan federal government.

However, water consumption rose significantly to 17 million imperial gallons (77 Ml) a day by 1964, prompting the need for additional dams.