AbstractA modified finite element method is proposed to solve the unsteady pipe flow equations. This approach yields a six‐point implicit scheme with two weighting parameters. An accuracy analysis carried out using the modified equation approach showed that the proposed scheme has higher accuracy compared to other methods. A comparison of experimental data and the results of numerical solution showed that the required damping and smoothing of a pressure wave can be obtained when numerical diffusion is produced by the applied method. It suggests that the physical dissipation process observed in the water hammer phenomenon is not represented properly in its mathematical model. Therefore, the classical system of water hammer equations seems to be incomplete. Copyright © 2004 John Wiley & Sons, Ltd.