The purpose-built facility will contribute to high quality care, while improving the experience for patients, staff and visitors.

Robertson Capital Projects will deliver the project from design to construction and maintenance.

At a meeting of the NHS Orkney Board, at the Balfour Hospital in Kirkwall, NHS Orkney chief executive, Cathie Cowan, said: “Today is hugely significant and, as Orcadians would say, we are a ‘peedie’ step closer in delivering a long awaited new hospital and healthcare facility for Orkney. This long awaited development will match our aspirations to deliver the highest quality care and services from fit for purpose facilities.

“The new building will also support the relocation of Skerryvore and Heilendi GP practices and King Street dental services. This investment, the biggest yet for NHS Orkney, will enable us to start providing services (which currently we rely on other Boards to provide) here and so support more care and services closer to home. Travelling outwith Orkney for routine care will become a thing of the past for many.”

Neil McCormick, managing director for Robertson Capital Projects, said: “We are delighted that Robertson has been selected to work with NHS Orkney under a 25 year partnership arrangement to deliver this significant investment. This is the start of a long term relationship. Over the coming months we will work together with all stakeholders to finalise the proposals for the design, construction, funding and maintenance of the project with a proposed start on site later this year.”

Kerry Alexander, NPD (non-profit distributing) programme director of the Scottish Futures Trust, said: “This is a landmark moment for the delivery of this new state-of-the-art hospital. With construction soon to start this will support many hundreds of jobs and be a boost to the local economy.”