The award recognised the public works project that had best identified and managed environmental impacts, while improving the quality of the local environment, a district council statement said.
It was presented at the institute's conference dinner in Wellington on Thursday.
There were seven entries in the Environmental and Sustainability category, the council statement said.
The Cromwell plant upgrade started in January 2016 and was completed ahead of time in September 2018, $2.8 million under budget.
Council executive manager infrastructure services Julie Muir said the council team was "immensely proud" of the positive environmental benefits delivered to the local community through the project.
Key features of the plant upgrade included the removal of chemicals from the filtering process and creation of an environment that improved E. coli levels by 1000 times; the connection of Bannockburn to the Cromwell treatment plant, resulting in the elimination of discharges at Bannockburn and restoration of land at Bannockburn which contained wastewater ponds; and new native planting, restoration and reinforcement of surrounding embankments, as well as future-proofing against earthquake damage.
The Cromwell plant had been designed and built so it could "easily and cost-effectively" be scaled up as population growth dictated, Ms Muir said.
Institute president Samantha Gain said the Cromwell upgrade went "significantly further than simply meeting regulatory requirements".
"We believe it sets the bar much higher for the integration of sustainable practices into public works projects throughout New Zealand," she said.
