Valley Water awards $1.88B Anderson Dam retrofit contract amid $741M cost jump
Santa Clara Valley Water District, California · Meeting date: July 24, 2026 · Published: July 26, 2026
The Santa Clara Valley Water District has greenlit the largest project in its history, awarding a massive seismic retrofit contract to a joint venture despite significant late-stage design and material cost escalations pushing total project estimates to $2.8 billion.
Key points
- Valley Water awarded the $1.88 billion construction contract, plus a $50 million contingency, to Flatiron Dragados Sukut ADSRP Joint Venture.
- The engineer's estimate surged by $741 million between the 90% and 100% design phases, driven heavily by spillway extensions and foundation excavation.
- Despite the overall project cost increases, the winning bid came in approximately $90 million below the final engineer's estimate.
- The board also approved a $124.3 million contract to Shimmick Construction for the Coyote Creek Flood Protection Project during the same meeting.
Full report
The Santa Clara Valley Water District (Valley Water) Board of Directors approved a $1.88 billion construction contract for the Anderson Dam Seismic Retrofit Project on July 24, 2026, advancing the single largest capital project in the utility's history.
The contract, which includes a $50 million contingency, was awarded to the Flatiron Dragados Sukut ADSRP Joint Venture. Ryan McCarter, Deputy Operating Officer of the Dam Safety and Capital Delivery Division, noted that the joint venture allows the contractors to combine their expertise, pointing out that Sukut is an earthwork expert and that the firms previously collaborated successfully on the Calaveras Dam replacement project.
The award follows a period of steep cost escalations for the district. McCarter detailed that the engineer's estimate increased by $741 million as the project transitioned from 90% to 100% design. The total project cost is now estimated to reach approximately $2.8 billion.
The cost jump was driven by a combination of regulatory requirements, design adjustments, and market conditions. Direct costs rose significantly after comments from regulators and a board of consultants necessitated extending the dam's spillway and adding substantial foundation preparation and excavation quantities. McCarter also cited a "death by a thousand cuts" from minor design refinements, alongside post-COVID material and labor cost increases in the California construction market. Indirect costs—the markups contractors require to execute the job—accounted for $210 million of the increase, while escalation and estimating contingencies added another $96 million.
Despite the ballooning overall estimates, McCarter offered a silver lining, noting that the joint venture's winning bid ultimately came in about $90 million below the final engineer's estimate.
Director John L. Varela emphasized the critical nature of the investment. Anderson Reservoir is the largest above-ground storage facility in the county, and the retrofit is required to bring the dam up to current seismic safety standards. Once complete, the project will restore the reservoir's storage capacity, upgrade its outlet system for greater operational flexibility, and support environmental mandates, including maintaining a cold water pool for releases into Coyote Creek.
In a separate action during the same meeting, the board also awarded a $124.38 million construction contract with an $18.66 million contingency to Shimmick Construction Company for the second half of the 9-mile Coyote Creek Flood Protection Project.
This summary was generated by AI based on the source document and may contain errors.
Source: Board of Directors, Santa Clara Valley Water District