The Omarama wastewater treatment plant upgrade project started about two weeks ago and will continue for much of 2019.
A new disposal system, a sub-surface dispersal field for wastewater, is being constructed at the township's wastewater oxidation pond on land owned by Omarama Airfield, a council-controlled organisation.
That will be followed by the construction of a pumping station.
Mr Pacey said at present, wastewater was pumped to a discharge point at Omarama Stream.
However, that was no longer appropriate, he said.
"Due to changing environment requirements and subsequent resource consent conditions, the upgraded system will pump the current discharge across the highway to a sub-surface dispersal field.
"Currently, wastewater is treated via oxidation pond and wetland. The new system will be treated by via oxidation pond, wetland and discharged via sub-surface dispersal."
The council's 2019 pre-election report on its website said the construction of a new irrigation disposal system from the Omarama wastewater treatment plant addressed "existing environmental risks and meets regional council and iwi requirements".
The project, funded by a combination of council depreciation, development contribution and loan funding, was initially budgeted to cost in the region of $500,000.
However, the price tag had increased since then.
"Our current indications are showing it is likely to cost a bit more than that," Mr Pacey said.
"Our first tender - there are two stages to the project - came in approximately $150,000 over the estimate, so, at the moment, we are likely to be tracking around $700,000. Tenders close for the second stage on September 2, so we will have more information regarding final price after that."
