Enhancing stakeholders’ knowledge of circular economy (CE) is critical to applying CE principles in construction industry practices. However, researchers have highlighted the gap between “knowledge” and “confidence in the knowledge”, which is commonly referred to as the Dunning-Kruger effect, hinders CE adoption and knowledge proficiency (KP) can be used to overcome it. Designers play a crucial role in implementing CE practices in construction projects, and their knowledge needs to be sharpened for proper CE implementation in the construction industry. Thus, this research aims to develop a conceptual framework to propose how KP can be applied to designers to overcome the Dunning-Kruger effect in the implementation of CE in the construction industry. An extensive literature review was conducted using the content analysis technique to achieve this aim. The findings revealed the phenomenon of the Dunning-Kruger effect, seven key factors influencing it, features of five KP levels (fundamental awareness, novice, intermediate, advanced, and expert) and the theoretical criteria for understanding CE knowledge in the KP levels. Furthermore, eight key areas of information required, and 15 CE design skills have been identified with key CE values. Finally, a conceptual framework for assessing the CE KP of designers has been proposed to overcome the Dunning-Kruger effect. These findings will be beneficial for construction project stakeholders to initiate the required actions to ensure proper CE implementation in construction projects.