Reservoir filling operations in hydropower or irrigation projects induce changes in regional flow and groundwater conditions, which may cause geotechnical, hydrogeology and water quality impacts in engineering projects. In special, projects where reservoirs reach important urban areas, rising water table may change soil matric suction and cause soil collapse and structural damage. During design phase, this is a most important issue, for design, construction and owner engineers to evaluate the extension and magnitude of the impacts or damage that will be imposed to buildings, roadways and utilities. This paper presents the methodology that was used in a case history in mideastern Brazil, of a 20,000 people urban area, located at the border of a reservoir lake that will be filled after the rainy season of 2004-2005. The paper presents the geotechnical characterization of the soils in the area of the project and their collapse potential. Also is presented the methodology to estimate structural damage and repair costs for the dam owner, to prepare an action plan for the post filling period. It is estimated that 99% of the buildings will present slight damage and approximately 1% will present moderate damage. To evaluate the average individual construction value, homes were inspected in their construction standards and apparent age, to estimate the order of magnitude of repair costs due to angular distortions that would be caused by soil collapse. Based on preliminary inspections to evaluate home conditions, the relative average repair costs were estimated in the order of 2.4% to 5.0% of current construction value and total repair costs are expected to reach the range of US$ 300,000 to US$ 600,000.