Barwon Water is embarking on a major upgrade of the Torquay and Jan Juc water supply system.
Three key projects are involved in the $16.8 million program, including constructing a new storage tank, pump station and pipelines.
Barwon Water General Manager Capital Projects Paul Northey said Torquay and Jan Juc had experienced rapid population growth and new infrastructure was required to meet future demand.
"These projects will ensure Barwon Water can provide a safe, reliable water supply system that meets the needs of the community," Mr Northey said.
A $1.9 million upgrade to the Jan Juc water supply system was the first project to begin, with work starting in early March.
It involves constructing a new pump station and a 2.7-kilometre water supply pipeline.
The pump station will be located at the existing water tank site on the Great Ocean Road, west of Jan Juc.
The new pipeline will travel along:
Mr Northey said some residents in high areas around Jan Juc were not currently connected to the reticulated supply system.
"The new pump station and pipeline will enable them to connect to the Barwon Water network and provide supply security," Mr Northey said.
"The infrastructure will also cater for future development and improve water pressure for existing customers."
Sections of the pipeline are being bored underground to minimise disruption and protect vegetation along the pipeline route.
Traffic lanes will be closed along the Great Ocean Road, Bells Boulevard and Strathmore Drive as construction progresses.
Work is expected to be completed in June, 2011.
Construction of a new 15-million litre storage tank also began at the end of March.
The $7.1 million tank will be built adjacent to the existing 0.5-million litre tank on Ghazeepore Road. It is expected to be completed by June, 2012.
Work on a 3.2-kilometre pipeline to connect the new tank to the storage basin on Grossmans Road will start in the April school holidays and is expected to be completed in September, 2011.
Changed traffic conditions during construction will be advertised in the local media.
The projects are part of the Barwon Water Alliance capital works program. The Alliance combines the skills and experience of Barwon Water, design and engineering company GHD and construction company John Holland.