It is expected to take a year to build.
Waihemo Community Board chairwoman Kathy Dennison called the project "a long time coming".
At the start of the project Waitaki District Council faced opposition from people who did not want the upgrade, she said, but communities such as Moeraki and Hampden had faced several boil water notices.
The aim of the project, a water supply which met the national drinking water standards, was a good way forward, she said.
The town south of the pipeline, Palmerston, had its own upgrade "a few years ago" and "haven’t looked back", Mrs Dennison said.
"It was great because we were able to free up some water and people could apply for water. It’s been a really good outcome for that community."
The new pipeline would pass through 41 private properties and she congratulated the council on working with landowners. The contract to construct the pipeline was awarded to Whitestone Contracting Ltd for $4.8million.
The council’s assets group manager, Neil Jorgensen, said getting the project to a construction start was "fantastic".
The cost of the project had increased from the estimate of $5.2 million in 2015 to an actual cost of $5.7million.
He said this would not change the ratepayer contribution of $2.4million required for the project.
The additional cost would be funded from existing depreciation funds and provision for future growth.
The reason for the cost jump was the public consultation period took longer than expected, he said.
"When you’re talking with that many landowners — we started with 80 people — it just takes a long time. In our original planning we had not allocated that much time."
