A £1 billion rail investment programme, described as the biggest in Scotland for a generation, may not be delivered on time because of delays in awarding contracts.

The Edinburgh Glasgow Improvement Programme (EGIP) suffered a major blow after the Scottish Government admitted it could not guarantee one of the key planks, the electrification of the Cumbernauld line, would be ready before the 2014 Commonwealth Games in Glasgow.

It is a significant embarrassment for ministers, who had hailed the flagship scheme as part of ambitious plans to improve the country's infrastructure, creating jobs and boosting the economy.

Richard Baker, Labour's Shadow Cabinet Secretary for Infrastructure and Capital Investment, said: "Unfortunately, this project joins the ever-growing list of major infrastructure projects delayed by the SNP.

"It is deeply disappointing that it now looks as though the electrification will not take place before the 2014 Games – one of the project's key milestones."

Jim Hume, LibDem transport spokesman, said: "We have a shovel-ready project coming up and, with two years to go before the Commonwealth Games, work hasn't even started. The SNP need to get their act together."

EGIP aims to cut train journey times between Glasgow and Edinburgh from 55 minutes to 37, with more than 200 miles of track along eight routes due to be electrified by 2016. However, senior officials have become increasingly concerned that delays in appointing contractors to carry out major infrastructure works could lead to target completion dates being missed.

Sources within the project said there was a tense relationship between Transport Scotland, the Government agency providing the project's funding, and Network Rail, which owns and operates the UK's railways and is delivering the infrastructure elements of EGIP.

A spokeswoman for Transport Scotland said services on the Glasgow to Cumbernauld line would form "an integral part of the transport strategy for the Commonwealth Games". But she declined to say whether electrification of the route would be finished before the Games, in line with EGIP's official timetable. "We continue to work with Network Rail to electrify Cumbernauld services in time for the 2014 Games," she said.

A Network Rail spokesman said: "Network Rail is working to the programme for the delivery of the infrastructure to support new EGIP services, including considering options with Transport Scotland to electrify the line in time for the Commonwealth Games."

However, a project source questioned whether that was now possible. "The official line is Network Rail is exploring options for electrifying the line ahead of the 2014 Games. But it's clear those options are undeliverable," the source said.

Network Rail sought approval to begin the process of awarding a contract for the main £350m electrification in August, The Herald understands.

Project officials have since been growing increasingly anxious that key milestones would be missed unless authorisation was given by Transport Scotland to go ahead.