The firm with architect partner Bennetts Associates will transform the former Odeon Cinema on Northgate Street into an iconic cultural centre.
Detailed designs are still being worked up and Kier is now expected to start building work in February.
Gary Wintersgill, managing director of Kier Construction’s Northern Division, said the contractor seeks to achieve 70% local labour and subcontractors, and 75% local material suppliers.
It will also create 15 building trade apprenticeships and 38 weeks of training opportunities for local schools and colleges.
Bennetts Associates Director Simon Erridge said: “This is the most significant new building project in Chester for decades.
“Chester’s brief is incredibly imaginative, demonstrating that it is possible for redundant buildings to be transformed and regenerate the cultural and economic life of our city centres.”
The 800-seat theatre will be housed in a new building, linked to the existing by open foyer spaces.
The Grade II listed Odeon itself is to be restored and converted into a contemporary city library, including a café, study spaces and a 120-seat screen located on the former cinema balcony.
Fully equipped to receive touring productions, the main theatre auditorium will also convert into a 600-seat venue to support Chester-based productions. A separate 150-seat studio will provide flexible rehearsal and education space.
When built in 1936, The Odeon was one of a great number of new cinemas in the UK to employ the distinctive art-deco style.
The proposed scheme will strip out later alterations and restore the original scale and proportions of the building’s interiors.