American infrastructure and engineering group CH2M has officially been awarded a contract to manage the massive refurbishment of the Houses of Parliament, beating domestic rivals to the multi-billion pound deal.

A second contract for architectural and design services was handed to international consultancy BDP for the programme, which is running late.

The Grade I-listed Palace of  Westminster is falling into disrepair with many of its major systems not having been updated or overhauled since construction in the mid-1800s.

Estimates on how much the work will cost vary, but one of the most definitive projections comes from Deloitte. The consultancy said shutting Parliament and relocating MPs while the work was carried out would result in a total bill of £3.5bn and take six years.

A rolling programme in which MPs remained in the building with sections of Westminster being shut down to allow work would cost £5.7bn and take 32 years.

CH2M is understood to have been awarded the contract at the last moment, edging out UK-based rival Mace with the lowest price.

The huge outlay required to refurbish Westminster has proved controversial, with the Government looking to make huge public spending savings. It has been pushed back by a combination of the snap election and MPs reluctant to tackle a potentially contentious issue.

However, CH2M winning the contract will also raise eyebrows with the privately held business already facing criticism over the HS2 contract. Allegations of a “revolving door” for staff between HS2 and CH2M meant the company voluntarily withdrew from the rail link contract as rival Mace threatened a legal challenge.

Awarding such a prestigious and high profile job as overseeing the rebuilding of Westminster - the “Mother of all Parliaments” according to 19th century politician John Bright - to the US business is certain to raise questions.

Parliament has yet to make a decision on how exactly to carry out the work - whether in a single hit or rolling programme - but the Parliament Restoration and Renewal Programme, which is overseeing the project, said the average annual fee for the architectural work was between £10.4m and £21.3m. For the project management this fee was between £4m and £8.6m a year.

Industry sources suggest this could go much higher, with the lack of clarity on exactly what work will be entailed meaning that costs are certain to rise.

Insiders who have seen how the bids were evaluated said the low cost of CH2M’s submission means the company will “struggle to make a margin”, with another adding it was “inevitable” that costs will rise.