The review will be led by Mark Gibson and will report to the Business Secretary and Skills Secretary John Denham.
"Mark Gibson has extensive experience in working to improve the competitiveness of UK industry," said Business Secretary Lord Mandelson.
"His remit is to draw up clear recommendations for ensuring that British companies and workers are fully equipped for vital future jobs in industries like nuclear new build, and the other large scale engineering construction work. Thus ensuring that those jobs and that innovation come to the UK."
It will assess the state of productivity in engineering construction in the UK and identify the key inhibitors to productivity including skills aspects. It will make recommendations on ways to improve skills and productivity in the UK engineering construction industry - such as through government procurement requirements - and identify specific factors influencing success for UK-based companies bidding for UK and foreign engineering construction contracts.
This follows in the wake of wildcat strikes throughout the UK against the use of cheap foreign labour and claims by unions that British workers are being excluded from UK sites in favour of cheap foreign labour.
The review aims to establish whether there is anything more Government or industry can do to ensure British companies succeed in winning and delivering engineering construction contracts in an increasingly competitive sector.
"We know there are major projects out there which will offer great opportunities for construction and engineering firms, like nuclear new build, rail and renewable energy projects," said Skills Secretary John Denham.
"We need to ensure that the Government and industry do whatever it takes to build productivity and improve skills to help put British firms in the best place to compete for contracts and reap the benefits of innovation. This is just what this Commission will help us achieve."