The contractors had been called in by the Dunedin City Council to remove a blackbird's nest and eggs from a Crawford St traffic light, after it was deemed a distraction for motorists.
Council contract manager Peter Hughes said Downer was asked to relocate the nest to a nearby tree.
However, as the nest was being removed, it disintegrated and the contractor dropped the eggs, he said.
''The nest wasn't particularly well constructed and it all went west,'' Mr Hughes said.
He was unsure how many eggs were broken but said it was two or three.
When the ODT visited the site yesterday, a juvenile female blackbird was circling above the traffic lights.
Department of Conservation ranger Graeme Loh said relocating a nest was a solution for several bird species, but blackbirds were ''prone to disturbance''. A blackbird nest needed to be moved close to the original nesting location for the mother to find it.
After a relocation, the eggs had ''hours'' to be found before the mother ''gave up'' its search and would start building another nest.
A blackbird would not nest in the same place, if it had previously failed, he said.
''They won't keep hammering away at something that doesn't work,'' Mr Loh said.
Council roading maintenance engineer Peter Standring said moving the nest would have cost ratepayers about $100.
Mr Standring said he was aware female blackbirds had difficulty finding a relocated nest.
Last year, a blackbird nested in the same lights and contractors shifted the nest and offspring to a nearby tree but the chicks were ''disowned'' by the blackbird, he said.
The council had no plans to review its policy on nest relocation but would be ''encouraging'' birds to nest elsewhere.
''As that one [traffic light] is generally targeted, we might see how we can cover up that one for next year.''
The nest had to be removed, as it could distract drivers or obscure the orange light, he said.
