Planned changes include stripping carparks out of Strathallan St, no longer allowing a right turn from it into Portsmouth Dr, and installing a roundabout at the intersection of Otaki and Orari Sts.
A contract could be awarded by the Dunedin City Council next month.
The work is part of a four-stage programme known as the harbour arterial project, intended to reduce traffic congestion in central Dunedin, where a new hospital is being built, and create a more efficient route for vehicles and freight by Otago Harbour.
Wharf St was the focus of the first stage, which was mostly about creating a more viable environment for cycling and adjusting intersections to enhance vehicle access to the harbour basin.
Work in South Dunedin has been marked as stage 3 and is to proceed ahead of stage 2 work in Thomas Burns St.
The council commented in documents there were "still some issues to work through on stage 2".
The harbour arterial has been described by the council as a 3.8km bypass for traffic to avoid central Dunedin when travelling between the south and north of the city.
It connects State Highway 1 with SH88 mainly through streets on the harbour side of railway tracks, serving as a priority freight route.
The project making the route more efficient has been estimated to cost $16.3 million and is partly funded by Waka Kotahi NZ Transport Agency.
More than 16,000 vehicles a day use the route already.
In South Dunedin, removing carparks from both sides of Strathallan St will be one key change.
Another will be providing two left-turn lanes from Strathallan St into Wharf St and no right turn to Portsmouth Dr.
The planned roundabout at the intersection of Otaki and Orari Sts is expected to assist with traffic circulation, including for motorists looking to access Portsmouth Dr from Orari St.
The council said it would work with freight operators in Strathallan St to avoid hold-ups in the area during their peak pre-Christmas rush.
When the stage 2 work gets under way in the Thomas Burns St area, it is intended two roundabouts will be added in Tewsley St.
Other work in Thomas Burns St is expected to include installation of a median barrier to prevent right turns from it into Cresswell and Bombay Sts.
Motorists will be able to access the Thomas Burns carparks through a left turn only.
It is intended the fourth stage of the harbour arterial programme will involve upgrading intersections from the Dunedin Railway Station footbridge to Frederick St and SH88 through Ward St and the Ward St railway overbridge.
The scope of the project includes upgrading the Ward St overbridge.
The full programme is due to be completed in 2027.
