The Panama Canal, the 100-year-old waterway that changed commerce in the Western hemisphere, has been undergoing an expansion to allow bigger, modern shipping boats through the Central American country. But that expansion is reportedly now on the "brink of failure" after cost overruns have caused infighting between the contractors and Panama's government.

On Wednesday, the group of European and Panamanian companies behind the construction of the modernized Panama Canal called the Group United for the Canal (GUPC), said the Panama Canal Authority had walked out on negotiations late Tuesday night, according to the Wall Street Journal. The Panama Canal Authority is the Panamanian government's organization overseeing the project.

Talks had been ongoing for a month after cost overruns expanded the project's overall budget from an estimated $5.25 billion to nearly $7 billion. The GUPC, led by Spanish construction company Sacyr, said "the break in negotiations puts the Panama Canal expansion and up to 10,000 jobs at immediate risk."

But Jorge Quijano, head of the Panama Canal Authority, said the contractors were responsible for the break in negotiations, according to a Reuters report. He told a news conference that the GUPC had been "inflexible," demanding "exorbitant" and unqualified funding for unverified cost overruns for the project -- an amount which has grown to $1.6 billion over the estimated project cost.

Construction on the Panama Canal has already been slowed by about 75 percent over the past few weeks while negotiations over the project's funding were ongoing. Now the threat of a total work stoppage and collapse of the project is real if the negotiations break down even further.

Both parties said they were willing to continue negotiations. Quijano told the news conference, "The distance between the parties remained too great, mainly because the [GUPC] has acted against the interests of Panama and its canal."

"It doesn't mean a deal is no longer possible, although the window is closing minute by minute," said Quijano, according to Reuters. "What we are not going to permit is that the project be halted for an excessive period." He also said the project, which was begun in 2007 and is about 70 percent finished, would be completed in 2015 "with or without" the GUPC.

For the GUPC's part, the consortium released a written statement that said it wanted to keep working and negotiating to reach a solution, but needed the Panama Canal Authority to "abandon its unreasonably rigid position," according to the WSJ.

The cost overruns are due to a specific leg of the project to widen the ever-important shipping canal, initially opened 1914 after nearly 10 years of an intense, dangerous and deadly construction project led by the U.S. The reason for cost overruns is the expansion of the Panama Canal's locks -- the part of a canal that lifts and lowers ships to match sea level. The GUPC said it could complete the locks portion of the project for $3.1 billion, but that has ballooned by another 50 percent. Other companies that bid on the project, including U.S.-based Bechtel Group, could not bid that low, Bechtel reportedly saying that the GUPC couldn't even "pour the concrete" for a bid that low. 

Shipping cross the Panama Canal has risen from about 1,000 ships per year to over 14,000 ships per year over the past century of the Canal's existence. The canal was jointly controlled by an American/Panamanian coalition until 1999, when the Panamanian government took full control with the Panama Canal Authority. Panamanian taxpayers are paying for the expansion project.