The Edinburgh to Glasgow electrification project could be delayed by up to seven months and has increased beyond its previous £742 million cost estimate, it has been revealed.

Analysis of Network Rail’s performance by the Office of Rail and Road (ORR) suggests the £742m electrification of the Edinburgh-Glasgow line is unlikely to be completed by December of this year, with services not expected to be on the line until July 2017.

Improvement works on the Highland mainline and the Aberdeen to Inverness route are also making “slow progress”, the report states.

Transport Minister Humza Yousaf said he was “concerned and disappointed” with Network Rail following the announcement.

The ORR has ordered Transport Scotland to carry out a review of the governance of major rail projects amid concerns “regarding the ability of key projects to meet their obligations and regulatory milestones”.

Its report identified “systemic issues around project planning and delivery” while “affordability and deliverability risks” are emerging for projects in the earlier stages of development and delivery.

The Scottish Government-funded Edinburgh Glasgow Improvement Programme includes upgrades to junctions and infrastructure, in addition to the widespread electrification of the country’s rail network.

Humza Yousaf hit out at “systematic issues” including poor management of contractors and unsatisfactory planning and cost estimation.

The minister said: “I am not prepared to simply accept the long-term cost implications nor the revised programmes that Network Rail have set out.

“I will also be doing everything possible to ensure that Network Rail deliver the full programme in Scotland by March 2019 and without any extra funding from the Scottish Government.

“Whilst there is always risk in the delivery of major construction projects, Network Rail have fallen short of their previous standards.”

The ORR said “increasing cost estimates” are beginning to put pressure on Network Rail’s funding cap for the period April 2014 to March 2019.

The report also praised progress made on health and safety and Network Rail’s programme to improve asset reliability.

ORR chief executive, Joanna Whittington, said: “Network Rail has successfully delivered some major enhancement projects in the past year, including Scotland’s first new rail line in over 100 years, the Borders Railway.

“However, there are cost and delivery issues on other projects which need to be addressed.

“Over the course of the next year, we need to see evidence that Network Rail’s initiatives are delivering financial efficiencies and noticeable performance improvements for passengers while achieving gains in health and safety.”

Phil Verster, managing director of Network Rail Scotland and the ScotRail Alliance, said: “Our Network Rail project teams and their suppliers have a strong and proud track record in Scotland of delivering on-time and on-budget.

“We need look no further than the Borders Railway line to see evidence of that.

“The programme impacts highlighted today will not delay the introduction of our exciting new fleet of faster, longer, greener trains - nor will they impact on our ability to deliver the 200 new services and 20,000 extra seats promised in the Revolution in Rail timetable change.

“Very importantly, our teams have learnt valuable lessons from the circumstances, decisions and programme impacts over the last months.

“The Edinburgh-Glasgow Improvement Programme is still progressing well and, as the ORR indicated today, the costs have risen due to extra compliance requirements, complicated interfaces with other projects and other unforeseen factors such as severe weather impacts.

“Despite this, I am pleased to confirm that we are committed to still deliver the overall railway enhancement programme for Scotland by March 2019, and within the agreed funding limits.”