The new duplicate main for Northumbrian Water will supplement the existing 35-year-old 1.4m diameter GRP pipe and will be 1.2m diameter ductile iron.
Work on the new 1 mile long steel main is due to start proper in June and be completed in early 2013.
The firm will fit each 8.1m long section from an existing intake point at Ovingham on the River Tyne, west of Newcastle, to Horsley water treatment works.
The route of the new main will predominantly take it through farmland, crossing five existing strategic mains on the way, two of which the new main will tap into.
Costain Framework Manager, Ben McCormac said: “The new contract is a good boost for morale and a great opportunity to develop our relationship and demonstrate to the client what we’re capable of.”