The water point marked "6" on the map you show is the drinking water plant at Vung Tau, and not the dam in the previous photos that you mention.
I have pinched another map from a later date of the Nui Dat area and just in front of the RAASC /RAEME/ARMOUR (left hand side) area you will note a man made dam. This was not in existence in my time nor was the bypass road shown towards the top of shot. In my days Armour was located about where the road joins on where it is named "Pearly Gates", RAEME was over towards Luscombe (almost centre of shot) and the RAASC perimeter was between Engineers and the Bn, where the dam is now.

I am assuming that this is the area shown. If you look at the second photograph you will notice a small hill (Nui Dat) in the background. That small hill (Nui Dat itself) was originally occupied on the western side by a Company of 5 RAR and later taken over by SAS.
As for the selection of the spot to place Vung Tau, that area was originally a swamp and used by the locals as a rubbish dump. In early 1966, a dozer operator, a tipper and a couple of Grunts were sent down from Bien Hoa to level the area that was later to become "the Bowl". The Grunts job was to pick of the locals who took pot shots at the dozer driver while he was working filling in the swamp. The area was covered by a couple of feet of sand and lo and behold around about April 1966 the Australian Logistic Force moved in. Not long after that the Monsoons hit. The bowl went under water, well half of it did at least.


This area then became known as "Lake Glendenning" named in honour of our illustrious Company Commander of the same name.
Our Ops Officer then did a deal with the Engineers to dig a channel to drain the water out. (Remember that this land was reclaimed before we got there so at the particular time the swampy nature of the history of the site was an unknown quantity - to us, the inhabitants at least!.) This channel filled up with water rapidly, as the sad knowledge that we were below the water table began to sink in, and was from then on known as "Ferguson's Folly".


This was about the time that 1 Coy HQ decided to move to the higher side of the bowl and a 'fair swap' was made with 87 Tpt Pl who got the short end of the stick and moved from our high and dry area into the swampy end (once our tippers had filled it in, that is.)
The decisions re the area allocations were all made in Saigon, or perhaps Canberra, so I guess in their eyes all was a great success.
Some Engineer Officer possibly got a gong for his design and planning.
Where IS that sarcasm button?
Regards
Glen