Government plans for a £35m detention centre for asylum seekers in south-west London have hit difficulties because of concerns over project insurance and rising bid costs.
Building understands that at least one consortium shortlisted for the project is on the verge of pulling out of the race for the PFI contract, and other teams are weighing up their options.

The project ground to a halt in February, shortly before the final bids were due to be tabled, after the Yarl's Wood centre in Bedfordshire was destroyed by fire. A source close to the project, in Harmondsworth near Heathrow Airport, said insurance firms were likely to refuse to cover the operators of the centre after the Yarl's Wood blaze, forcing the government to underwrite the project.

Since the fire, the government has also revised plans for the scheme and now wants the centre to contain more security measures.

The five shortlisted consortiums have been invited to re-bid for the project, but it is understood that some teams are reluctant because the changes to the tender will push up bid costs. The bids are due to be resubmitted by the end of August.

The remaining consortiums on the shortlist are Carillion/Group 4, Kier/Wackenhut, Gleeson/Securicor, Skanska/Rollalong and Interserve/UK Detention Services.

One source close to the scheme estimated that each team would have spent £250,000-400,000 preparing their original bids, and any changes to the plans to make the centre more secure would add at least the same again to bid costs.

The source said: "This is not joined-up procurement. The period for design and construction is still too short and there are significant planning risks that remain unresolved."

The government has also angered bidders by refusing to reimburse their costs after the first bidding programme was abandoned.