Construction also required replacement of a stretch of highway[3] and the closure of the Otago Central Railway beyond Clyde, though materials for the dam would provide significant traffic for the rest of the line which was experiencing a drop in freight tonnage.

National's support for a controversial aluminium smelter at Aramoana, another of Prime Minister Sir Robert Muldoon's Think Big projects of the late 1970s and early 1980s, was one justification propounded for the dam.

During construction, the adjacent rock was discovered to be microfractured, because of an earthquake fault running underneath the dam site.

A slip joint was built into the dam to accommodate 1–2 metres of potential ground movement,[7][8] and a large amount of slurry cement was pumped into the rock to stop water leaks.

This additional work was one reason for a major project cost overrun, which made the dam the most expensive in New Zealand.