The clause, a standard feature in most PWD contracts, gives the department the right to terminate the contract if progress of work does not adhere to the agreed schedule.

"It has been observed that you were found not to be diligent enough in your work and your estimated completion time will overshoot the agreed completion date of June 6, 2011," noted the letter.

"Your progress should have been at 33.1 percent (as at Sept 2, 2010) but the progress recorded thus far is only 27 percent."

The letter also instructed Sunshine Fleet - which belongs to three members of the Selangor royalty - to immediately stop all work, vacate the construction site and hand over ownership and control of site to the PWD.

The department also insisted that Sunshine Fleet leaves behind all project materials and resources. The firm will also be held liable for any extra costs arising from the delay.

When contacted, PWD director of health works Husnani Abdul Karim confirmed the issuance of the letter and said the project will now be re-tendered to interested parties.

However she could not say by how long this could set back construction.

The termination letter was sent after a series of warning letters to Sunshine Fleet for delays in work.

It is understood that the former main subcontractor GMH Sdn Bhd and several other subcontractors connected to the project, whose services had recently been terminated by Sunshine Fleet, have offered to take on the work as new contractors.

The termination of the main subcontractor was the second such decision during the course of construction, and was also related to money matters.

The first subcontractor, Isyoda (M) Sdn Bhd, had signed a mutual termination agreement with Sunshine Fleet after a drawn-out financial disagreement over the project.