Work will begin on the State Highway 2 roundabout in Te Puna this week, as contractors set up the site.
Preliminary work including surveying and locating services such as power, water stormwater and sewerage had already begun.
In March the New Zealand Transport Agency awarded Downer with a $5.25 million contract to build a two-laned roundabout to replace the Te Puna/Minden Rd intersection.
Work has begun but NZTA Bay of Plenty highways manager Niclas Johansson said the main part of the work, including construction of the roundabout, would get underway in September.
"While there will be speed reductions in place at times over the coming weeks this work is not expected to significantly impact traffic on SH2," Mr Johansson said.
The roundabout was thought to make it safer and easier to travel as traffic increased on SH2.
"Roundabouts naturally slow traffic and reduce the chance of head on or side impact crashes, reducing the risk of death or serious injury if someone makes a mistake and crashes," Mr Johansson said.
The Te Puna Memorial Hall would have to be deconstructed later this year to make way for the roundabout, but efforts were being made to find a suitable alternative.