The dam was built by Zilla in order to generate enough chi energy to power all the neighboring villages. But the project encountered multiple obstacles, causing Zilla to cut corners and use cheaper materials for the dam.
Shadow Warrior 3
The Evildoing Dragon accidentally causes some serious structural damage to dam, making it unstable. Once Lo Wang escapes with Hoji from Zilla and Motoko, he traverses the collapsing dam. After Wang leaves the dam, it proceeds to collapse.