The builder, who rebuilt Bellinzona Grange Country Retreat in Hepburn Springs, was awarded the $8.5 million contract.

On announcing the builder, the Minister for State and Regional Development John Brumby said the redevelopment was on schedule for construction to start late this month and be finished by early 2008.

"The company has a great track record in delivering large-scale building projects in provincial Victoria including Bellinzona Grange Country Retreat," he said.

Nicholson Construction intends to use local labour and suppliers and expects there to be up to 60 trades people on site at the peak of construction.

It is a fourth generation family business with about 50 employees.

The company will carry out works including refurbishing the existing heritage building and building public pool and spa facilities, a pedestrian bridge to the reception area, which includes a lift and a state-of-the-art wet area.

The floor area will be increased floor area by 65 per cent.

Hepburn Shire Council's deputy mayor Bill McClenaghan said choosing a builder based in the area would have a number of benefits.

Cr McClenaghan said the council had worked in partnership with the State Government through the council's chief executive officer Victor Szwed and infrastructure director Rod Conway to ensure the redevelopment proceeded

quickly.

The State Government has contributed $8 million, Hepburn Shire Council $1.2 million, Commonwealth Government $500,000, Victorian Mineral Water Committee $300,000 and Sustainable Energy Authority of Victoria $50,000.