Bechtel departs major Iraq project

Bechtel has been taken off a new children's hospital planned for Basra in Iraq due to delays and cost overruns on the job. Client the US State Department is to transfer project management for the Al Basrah Children's Hospital, whose budget has jumped from $50m to $120m in the last three years, to the US Army Corps of Engineers, according to a report in the New York Times late last week.

Bechtel claims the cost escalation is due to security problems and that the corps would not be able to complete the job. The firm has issued a five-page statement on problems experienced with the scheme citing "extraordinary security challenges" leading to security costs rising to $4.5m. It also pointed to costs across the Middle East rising by between 30-40% per year leading to a jump in costs per square metre from $1,000 to $1,436.

Bechtel's exit from the job follows troubles experienced by two other US firms in the country. The army is to restructure a major deal with Halliburton KBR, the largest contractor in Iraq. That firm has deals totalling £10bn with the US government. Parsons has also been terminated from two prison schemes following delays and cost overruns.