Contractors bidding for the £7bn part-privatisation of London Underground are warning that they will claim compensation for their bid costs if the election of a London mayor leads to the cancellation of the project.

One contractor said the bid would cost at least £10m, adding that it would claim costs if the DETR cancelled the project because the new London mayor wants a publicly owned Tube system.

The part-privatisation is enshrined in the Greater London Authority Bill, which should make the new mayor powerless to stop it. But the contractor explained that a mayor could create a political storm that would effectively halt the project. It is understood that such a move would be anticipated in any contract drawn up.

Consortia are expected to submit bids for the Tube by 31 March. One source at the client said most bidders were making enquiries about the performance specification of the contract and the availability of surveying information.

The warning follows a recent move by Taylor Woodrow to withdraw from a consortium bidding for the project. The company is understood to have made its move after discovering that there was a relatively low level of construction work on the package of Tube lines it is interested in.