The £85m expansion of the Edinburgh International Conference Centre will include a 2,000 sq m multi-purpose hall and offices.
The 126-week project is expected to employ 250 people during the construction phase and is due to be completed by 2013.
During excavation around 120,000t of material will be removed while work on the structure requires 3,300t of steelwork to be erected.
The multi-purpose hall will include a bespoke moving floor system that can be altered to create a flat-floored exhibition, tiered banqueting, or an auditorium.
Andrew McAlpine, director at McAlpine, said: “We are delighted to return to this site that we know well as main contractor for the Scottish Widows Edinburgh One building next door and the nearby Standard Life offices.
“We look forward to delivering another landmark building to this important area of the city.”
At a ground breaking ceremony City of Edinburgh Council leader, Jenny Dawe, said: “Experience tells us that when we invest in EICC we are investing in the future prosperity of the City and, with a £2.3 billion return forecast over the next thirty years, our long term investment is safe and sustainable through and beyond the current economic downturn.”