Bovis Lend Lease faces the awkward problem of finding a cladding contractor to replace Flour City Architectural Metals midway through work on the £230m Scottish parliament.
Flour City went into receivership last week and it is understood that its £7m contract will be retendered.

The Scottish parliament issued Flour City with a termination notice at the end of last month because of doubts over its ability to complete the work, which is due to be finished in January.

An insider on the project said it would be difficult for another firm to continue with the project as Flour City was in detailed talks with suppliers.

The insider said: "The job is technically difficult to manage and is likely to be delayed because the complex negotiations with suppliers will have to be finalised."

A spokesperson for the Scottish parliament said Bovis Lend Lease, the project manager on the scheme, was putting in place contingency plans to retain the material suppliers dealing with the project.

He said Flour City had been paid £800,000 for work undertaken and that another contractor would take over the job. He said: "The project is likely to be retendered but an additional contract is not expected."

The job is likely to be delayed because the complex negotiations with suppliers will have to be finalised

Insider on the Scottish parliament project

The spokesperson added that the parliament was under no legal obligation to retain the materials suppliers but that it would probably honour contracts.

Bovis Lend Lease confirmed that it is in talks with materials suppliers to keep the project on track. A spokesperson said Bovis is confident that it will meet the building programme.

The Enric Miralles-designed Scottish parliament has a troubled history since the project's watchdog admitted that it would exceed its £195m budget. Cost overruns were likely as the costing was based on 1998 prices and left no room for inflation.

It was also forecast that some specialist contracts would overrun.