Costain, in partnership with MWH, is set to start early works from December 2010 with major construction activities expected to be underway in the summer of 2011.
Frankley water treatment works supplies water to around 1.4 million people in Birmingham and the surrounding area.
The scheme is expected to take around two years to complete.
Costain’s water sector director, Matt Crabtree, said: ‘This is excellent news for us. The fact that Severn Trent has chosen to entrust work on this critical asset to us is a testament to the confidence it has quickly gained in Costain MWH’s ability to deliver.’