A Wellington Water director says the company is in a "dangerous spiral" where resources are sucked up dealing with burst pipes and less money is available for investment.
Faults are expected to be an ongoing issue putting pressure on operating expenditure budgets.
This has forced Wellington Water to reprioritise some of the Government's Three Waters fiscal stimulus package.
With the consequences of ageing infrastructure coming home to roost, councils across the region are drastically increasing spending on water infrastructure in their Long Term Plans.
Wellington Water is preparing to scale-up in response to this.
However, there are concerns about the local sector's capability and capacity, so an independent review has been commissioned.
Wellington Water manages water assets for the Hutt, Porirua, Upper Hutt and Wellington City councils, South Wairarapa District Council and Greater Wellington Regional Council.
Director Philip Barry told a recent committee the company is in a "vicious circle".
He said a historic underinvestment in infrastructure has resulted in more breakages, an increased spending on repairs, and less money available for investment.
"This is a dangerous spiral for any company to find itself in", he warned.
Wellington Water's company report said operational expenditure budgets were under pressure.
"When we have a lot of incidents in a row and these require 24/7 responses, we can't keep up with day to day faults so a backlog starts to grow. This impacts on non-financial performance," the report said.
Councils across the region have also asked Wellington Water to prepare an opex budget on the basis of the absolute minimum number of surprises for the next year.
That means the company needs an additional $24 million to have a sufficient contingency in place to the end of 2021/22, given the ongoing problems forecast.
The money has been found with some modest internal efficiencies in Wellington Water, but primarily through the reprioritisation of the Government's Three Waters fiscal stimulus funding.
Wellington Water's boundary got $47m of the $761m package.
About half of that is for regional projects and the other half is divided up between the individual councils.
The regional stimulus funding will now be heavily skewed towards responding to network failures, like burst pipes.
Very high critical asset investigations will not be affected by the funding re-jig.
Work to assess and inspect very high criticality assets began this month.
The health check, considered by an expert team, will reveal what condition the asset is in, when it next needs to be checked, and if any urgent work is needed.
"If we find any seriously dilapidated asset, we are ready to carry out emergency works," the company report said.
Wellington Water had a close shave with a critical asset last year.
Work was accelerated to fix a point in a massive wastewater tunnel running underneath the city after severe corrosion was discovered, jeopardising its structural integrity.
Failure to rehabilitate the 250m section of concern as soon as possible would have risked it spontaneously failing, resulting in "catastrophic" health and environmental consequences, a resource consent application for the work said.
There's a lot of work to do to undertake a more methodical and proactive approach to infrastructure management.
But a Wellington Water Long Term Planning update report said the capacity and capability of the local market is currently sized for historically static levels of funding.
"While we are ramping up, other large infrastructure projects within the region and nationally will also be competing for limited resources, this coupled with COVID uncertainty means if we are not well planned there is a risk that we fail to deliver our capital programme in future years", the report said.
Wellington Water has commissioned an independent review of local sector capability and capacity, which is expected to be completed by the end of this month.
Last year the Herald revealed the company pitched an accelerated apprenticeship scheme for an essential Three Waters workforce to retrain 100 people.
The $45m Covid-19 shovel-ready proposal was unsuccessful, but demonstrated a need for a more innovative and bolstered workforce.