One of New Zealand's most high-risk intersections is set to get a major makeover, boosting safety for drivers, cyclists and pedestrians.

The NZ Transport Agency has awarded a $7.3 million contract to Fulton Hogan to build a roundabout at the intersection of State Highway 30 (SH30) and State Highway 5 (SH5) Hemo Road in Rotorua.

Preliminary work will start in early April. The roundabout is expected to be complete in mid-2017.

The Transport Agency's acting Bay of Plenty highways manager Chris Young said the roundabout would replace a T-intersection that was ranked as the fourth riskiest in the country due to the high crash rate.

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Around 15,000 vehicles travel through the intersection every day, including 1500 trucks and commercial vehicles.

"This new roundabout will completely transform this area and reduce the risk of death and serious injury crashes," Mr Young said.

"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.

"Our data shows that changing a T-intersection to a roundabout reduces death and serious injury crashes by 90 per cent, while the total number of crashes reduces between 25 to 80 per cent."

Mr Young said the total cost of the project including property purchase and new cycleway and pedestrian features was $8.1 million.

"We know this project is highly anticipated within the local community and we are pleased to award the contract and get work underway," he said.

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The Transport Agency asks that motorists keep an eye out for contractors working on site and comply with any speed limit restrictions, which will be in place to protect the safety of contractors and other road users.