A team including Amey and Kvaerner has been chosen to carry out a privately financed redevelopment of the Ministry of Defence's Whitehall headquarters worth up to £800m over 30 years.

Engineer Hyder and funder Innisfree are the other members of the AHK consortium that won the redevelopment competition. The project's construction cost will be £200m, but subsequent facilities management work is expected to be worth even more. AHK will take over the running of the building when the upgrade is completed.

AHK beat a team led by QS and project manager Bucknall, in partnership with Taylor Woodrow, from a final shortlist of two.

The deal with AHK is expected to reach financial close in June. After this, the consortium will take responsibility for decanting 4000 MOD staff into offices around London while the department's main building is refurbished over the next four years.

Announcing the award on Monday, defence secretary George Robertson said the headquarters, which date back to the 1950s, fall well short of usual office standards and are badly in need of refurbishment. He said: ''I have directed that the redeveloped building should be functional, fit-for-purpose and not luxurious.

"The redevelopment will involve no gold-plating. The winning proposals include mainly open-plan offices throughout to provide flexible areas and increased staff capacity.

Amey chief executive Brian Staples called the award "the most prestigious private finance initiative contract so far let by government".