The initial contract was awarded in the summer of 1963 to Utah Construction & Mining Company, later purchased by Fluor. Project work commenced the following year with excavation work on the six-mile-long tunnel, opening an outlet channel about a half-mile long, and laying out a 13.5-mile gravel-surfaced road connecting the lake to the hydroelectric power station site.
Construction began from the fjord inward. As the shoreline was hilly and waterlogged, a former ocean liner was purchased, refitted, and docked at Doubtful Sound to provide worker accommodations.
As the tunnel was excavated inward, round-the-clock pumping operations went on to channel out water pushed into the tunnel from high pressure caused by surrounding mountains. The water's flow reached a peak of 12,000 gallons a minute.
The powerhouse at Lake Manapouri as built was enormous for an underground structure: 364 feet long, 59 feet wide, and 127 feet high. Housing seven turbines, each capable of producing 100,000 kilowatts, the powerhouse's construction required excavation work from solid rock.