Albury-based construction firm Zauner Construction, which built the Orange Regional Museum, has won the $3.4 million contract to demolish the entire hospital site in Dalton Street.

All buildings on site will go with only the historic ambulance station and about 20 trees to remain when the work is completed early next year.

The demolition team will not use explosives or a wrecking ball to bring down the buildings, instead a concrete munching machine will smash through the structure.

Zauner Construction director Garry Zauner said site works would start next month with asbestos to be removed first.

VIDEO: GARRY ZAUNER TELLS HOW HOSPITAL WILL BE DEMOLISHED

“The contaminated material will be dealt with in the initial stages and once that is made safe then we will use an excavator with a concrete munching bucket on the end of it to bring the building down to a safe level where traditional removal methods can then be employed,” he said.

Mr Zauner said the concrete muncher was regularly used in urban demolition work.

“It’s on the end of a 30-tonne excavator so it’s a pretty impressive bit of gear when it’s at full reach.”

He said it was unclear which part of the structure would be first to go but that would be determined once the site was further inspected.

Mr Zauner said the bricks would be crushed on site but dust would not be a major issue for nearby residents.

“That will be very well managed, our processes will ensure that is kept to a very minimum.”

Mayor John Davis said it was pleasing work would finally start after a lengthy process.

He said the site might become the new home of the NSW Department of Primary Industries but nothing had been decided.

“There has been a lot of discussion and media talk in regard to the new DPI proposal to re-develop the DPI industry in Orange.”

He said the DPI proposal would see it re-locate from its Bathurst Road site.

“That would take about half of the land available,” he said.

“We’ve got no control over that, that’s just an expression of interest at this stage.”

Cr Davis said efforts to save the hospital tower failed after there was no interest from developers.

“The initial idea, that was certainly worth exploring, was to keep the shell of the hospital tower to see if it could be converted into high-quality, multi-floor, residential apartments.

“There was no interest when we put that option to the market.

“Trying to demolish everything around that tower would’ve added to the cost considerably.”

Council bought the 2.1 hectare site from the state government for $3.3 million in April 2015 and it will pay the demolition costs.