The Costain-Skanska joint venture was named preferred bidder for contract C405 earlier this month. At the time, Crossrail said that the contract value was £250m.
With the deal now signed, however, Costain-Skanska has agreed a price of just £150m – a 40% reduction.
Construction will begin this year.
Crossrail programme director Andy Mitchell said that “very competitive bids” had been received for the Paddington contract. Similar savings could now be expected on the other five station contracts to be awarded. Next up are the Farringdon and Whitechapel station contracts, to be awarded later this year. The remaining contracts for Bond Street, Tottenham Court Road and Liverpool Street will all be awarded by spring 2012.
Costain chief executive Andrew Wyllie said: "We are delighted to have secured our fourth Crossrail contract, reflecting our ability to consistently deliver valuable solutions in the rail sector utilising our broad range of capabilities and depth of expertise. We look forward to working with Crossrail to deliver this landmark station and to playing our part in enhancing London's transport infrastructure."