China's state backed construction firms have earned an enviable reputation for their competitiveness in delivering huge infrastructure projects on time and under budget at home. But that reputation has taken a battering abroad thanks to two high profile failures.

One long running saga relates to conglomerate Citic Pacific's project to build two iron ore mines in the Pilbara region of Western Australia. The project is more than three years behind schedule. It is hoped ore from the first of the two production lines will be loaded onto vessels bound for the mainland this month. Construction on four more production lines has yet to begin.

Equally embarrassing for Hong Kong listed Citic Pacific, 58% owned by the state investment body Citic, is the soaring cost of the project which is already three times over budget. The two mines were estimated to cost USD 2.47 billion but the bill had soared to USD 9.1 million by the end of last year. Citic Pacific management has not said how much the other four production lines will cost but analysts say the budget's likely to be USD 1.2 billion.

Citic Pacific has placed much of the blame on its chief contractor, state backed Metallurgical Corporation of China which said in February that the cost of completing the construction work it was commissioned to do had surged to USD 4.26 billion, 2.4 times the USD 1.75 billion budget agreed in mid 2007.

The work include the building of rock crushers, ore concentrators, a pellet plant, material handling systems, a power plant, a desalination plant, workers' camp workshops, offices and handling facilities at the port.

Citic Pacific is not the first state backed Chinese firm to suffer construction cost blowouts in a major overseas project. China Railway Construction Corporation, one of the nation's largest railway builders, booked a loss of CNY 4.15 billion in 2010 for an 18 kilometer railway it built in Mecca, Saudi Arabia to transport Muslim pilgrims.

The Mecca project ballooned from CNY 12.35 billion to CNY 16 billion partly due to the Saudi government imposing extra demands on the project, according to CRCC. Analysts believe the costs were down to Riyadh pushing to have the project ready in time for the haj pilgrimage in late 2010.

While politics was at play in the railway project given that China is the largest importer of Saudi Arabia's oil, management shortcomings were partly responsible for the troubles at Citic Pacific.

Mr Chang Zhenming chairman of Citic Pacific attributed the cost blow outs to the surging Australian dollar and the cost of materials and labour due to inflation and talent shortages in the booming Australian economy. It also cited what it called miscalculations by MCC.

And it's not only Citic Pacific that has suffered rising costs in Australia. Global mining giants like British Australian firm Rio Tinto have also cited similar factors as project costs have risen sharply.

Mr Tom Albanese the London based firm's then chief executive said late last year that "It used to be, five years ago, that support costs in Australia were some of our cheapest in the world. Now they're the most expensive in the world. Some of it has to do with services, some of it has to do with procurement and a lot of it has to do with the Australian dollar."

Mr Jing Tianliang chairman of MCC said a year ago that some of its miscalculations were due to differences between Australian and mainland project management procedures as well as Australian labour rules that required MCC's Chinese technical staff to be proficient in English and meet specific qualifications. That forced MCC to hire more local staff rather than cheaper mainland engineers who have worked on its other projects, particularly in regions like Africa and the Middle East.

Mr Shaun Browne chairman of metals and mining consultancy AME Group said that some magnetite projects have struggled to achieve their target of concentrating the mineral to their target of 68% iron content, meaning prices will be lower still. All of those factors mean the likelihood of over budgeting requiring a higher price for the finished product than estimated to achieve a worthwhile return is high.