The contractor plans to convert the 1935 built Grade II listed building into an apartment block for students from Aston University and the City of Birmingham University.
The project will create around 460 student rooms as well as shops, bars and leisure facilities for students.
Its plan is a scaled down version of an earlier proposal which aimed to build a major tower block on the site.
The proposals will go before councillors next month and if approved, work could start in spring.
Jason Berry, development director of Wales-based Watkin Jones, said: “Of the £28m build costs, we are investing £8 million alone into the conservation work required to protect and preserve this historic building.
“Although there is no tower, the proposals go beyond ‘textbook conservation’, where the interventions are still bold and challenging in their own right. We have now increased the conversion aspect of the listed building, including basement spaces and the Drill Tower.
“There will be 463 new student units in this development, ranging from studio bedsits, through three- and four-bedroom clusters to duplex apartments. We think this can’t come at a better time for the city as the vibrant learning quarter grows around Eastside and Millennium Point.”