The council is preparing to start the procedure in the run-up to appointing a company with the brief of bringing all the city's crumbling highways up to scratch.

It follows Sheffield's successful bid for £663.8m of Government grants over 25 years under the Private Finance Initiative.

Once the council adds its own money, it helps to add up to a total contract value of around £2bn, making it the biggest contract the authority has awarded.

Such is the scale and legal complexity of the contract and the procedures that have to be followed that the start date for construction is estimated at August 2011.

Meanwhile the council admits that it is struggling to keep up with the demand for road and street lighting repairs.

More than doubling the annual budget is seen as a once-in-a-lifetime chance to shake off the reputation of 'pothole city'.

"This is the only way we are going to get roads across the city up to a reasonable standard within a reasonable time," said Coun Sylvia Dunkley, cabinet member for culture, leisure and streetscene.

Big construction firms across Europe are expected to bid for the work and the winner will have to convince the council over price, quality, a strategy for minimising disruption and its ability to work with local communities in assessing priorities.

The successful contractor will also become the employer of around 600 staff who currently work for the council's Street Force.

Details of the next steps will be presented to the council's cabinet on Wednesday. While services such as winter maintenance will be part of the PFI project, some highway-related functions including transport planning, road safety, traffic control, parking services and dealing with abandoned vehicles are being retained at the Town Hall.

Essentially, though, the scheme, the largest of its kind in the country, aims to improve all city roads and street lighting to a good standard in the first seven years of the contract and then to maintain them at this standard for the next 18 years.

The next stage is the Government's approval of Sheffield's business case, expected next month.

David Curtis, the council's acting executive director of Development, Environment and Leisure, said: "There is a lot of hard work ahead but this investment and ambitious programme of works will transform our city. We have spoken to many potential contractors and there is already a great deal of interest in the scheme.

"Once the business case is approved, we hope to be in a position, around February 2009, to start the procurement process to select a contractor to deliver the project."

Mr Curtis added: "I realise that this is a period of great uncertainty for all the staff who will transfer to the new service provider, so I am keen to ensure that the council appoints the best possible contractor, who will not only deliver the project to the standards we require but will also be a good employer for the staff transferred to them."



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