NQ Water is expecting the Magnetic Island Pipeline to be complete by mid-year.

Chairman Ian Hamilton says the current contract has been terminated by mutual agreement.

  "We are satisfied with the contractor's abilities and professional standards," Mr Hamilton said. "This is solely a contractual issue."

"The contractor has claimed significant variations to comply with the requirements of the contract.

"NQ Water operates under the Local Government Act and has an obligation to be prudent and act in a fiscally responsible manner.

"We are not prepared to accept the variations and are going to give short listed tenderers the opportunity to rebid for the work in order to get the best value for money."

They include McConnell Dowell, Pacific Marine Group (PMG) and Canstruct.

Mr Hamilton said NQ Water was acting swiftly.

"We are planning to recall tenders and award the contract within two weeks," he said. "The contract is expected to be complete mid-year.

"This is an essential service for Magnetic Island and we thank Pallarenda residents for their continued patience and apologise for any inconvenience.

"In the sort term, we plan to reinstate access to Terminus Park by removing barriers and fences, clean up the site and conduct other remedial works."