A Hewatt Earthworks scraper onsite at the Majura Parkway.

A Hewatt Earthworks scraper onsite at the Majura Parkway. Photo: Melissa Adams

Canberra's biggest construction project, the $288 million Majura Parkway, was plunged into turmoil on Monday with the road's key contractor threatening to walk away from the job.

The parkway faces major delays and potential cost blow-outs of tens of millions of dollars if the ACT government's builder, Fulton Hogan, and earth-moving contractor Hewatt Earthworks cannot resolve major contractual problems.

Trouble with the parkway will not only hit Canberra's construction industry, which is struggling with the end of the capital's building boom, but become a political headache for the ACT government, which has struggled for years to finish its building projects on time and on budget.

Hewatt, one of Canberra's biggest construction employers, is understood to be losing hundreds of thousands of dollars each week on the project, struggling to pay sub-contractors and suppliers, and looking to renegotiate its contract.

The company's managers flew to Melbourne on Monday for make-or-break crisis talks with lead contractor Fulton Hogan, where a temporary fix was agreed.

The two companies issued a joint written statement statement in the wake of the talks, saying they were "committed" to continuing to working together on the road.

The ACT government's Territory and Municipal Service Directorate was trying to play down the crisis on Monday evening, saying the project was on time and on budget and that nearly all of the earth moving work was done.

But one industry insider told The Canberra Times that a failure by Hewatt to continue building the parkway would create problems that would dwarf those seen at some of the city’s other troubled building jobs.

"This would make ASIO or Nishi look like a f---king tea party," the construction source said.

Hewatt Earthworks directly employs about 250 construction workers. Walking away from the parkway would affect the jobs and businesses of hundreds more contractors and suppliers around Canberra during a major downturn in the local sector.

Serious delays and cost overruns would also be a political problem for the ACT government, which only scraped the money together for the road link, regarded as vital national infrastructure, with the help of a $144 million injection from the previousG illard Labor government.

Complaints about Hewatt failing to pay its contractors and suppliers for Majura Parkway on time have been emerging in the construction community for months.

But it is understood the earth-moving firm has insisted that it is confident in its overall solvency, while acknowledging the problems on the Majura Parkway.

Hewatt principal Geoff Hewatt declined to be interviewed on Monday.

"I have no comment to make," he said.

A TAMS spokeswoman said the government was aware of the crisis talks in Melbourne.

"These discussions are in progress and are ongoing," she said.

"Fulton Hogan has confirmed to the ACT government that the project is being delivered on time and on budget with the majority of earthworks substantially completed (95 per cent)."

A spokeswoman for the Melbourne-based construction construction firm giant said in a statement that a deal had been done that would be "best" for the Canberra community.

"Fulton Hogan and its major subcontractor Hewatt Pty Ltd are committed to working together to achieve an outcome that is 'best for project' and the local community," the spokeswoman said.