The DNCC had put SM Constructions on the job to set up the U-loops on Oct 29 with an aim to ease traffic congestions in the capital.
The contractor says the Roads and Highways Department or RHD has created the obstacles by not clearing the land.
The project director fears that it will not be possible to complete the scheme in time, as they are yet to get the land.
The U-loops will be set up at Saatrasta, Kohinoor Chemical intersection, Mohakhali Bus Terminal, Mohakhali Flyover, Banani Chairmanbarhi, Banani Graveyard, Banani Overpass, Shewrha, Kaola, in front of Uttara RAB-1 offices, and near Jasimuddin Road.
The estimated cost of the project is Tk 248.3 million. The government is providing Tk 198.64 million while the city corporation will fund the remaining Tk 49.66 million.
During site visits on Thursday and Friday, workers were demolishing pavements and other structures at Kohinoor Chemical, Mohakhali Bus Terminal, Banani Chairmanbarhi, Banani Graveyard, Banani Overpass, and Uttara RAB-1 offices points.
SM Constructions Managing Director Hasibur Rahman Shaheen told bdnews24.com they could not start the work in some other areas as the RHD and Land Record and Survey Department have not cleared the land.
"They are making needless delays. The U-loops will be set up in time where we have got the land. But how will we work at the remaining points?" he asked.
He said people at the Bus Rapid Transit or BRT and Elevated Expressway projects were hindering the work at Uttara and Banani Graveyard points respectively.
The DNCC sent the U-loop project for approval to the Planning Commission by the end of last November. It proposed to start the work by December last year and complete it by June this year, but the commission approved it in March this year.
Later, the Local Government Division approved an extension of the project until June 2018 on the city corporation's wish.
The DNCC said it needed time to remove the structures and acquire the land. However, the estimated cost remained the same.
Project Director Khandaker Mahbub Alam said the RHD was demanding compensation for the 1.36 acres of land.
He alleged the RHD had not asked for the money before the project was taken up but raised the demand when the work started.
"We contacted different agencies after initiating the project in September 2015. Many letters have been traded.
“The project was discussed at a meeting attended by the road transport secretary. We were asked to submit a demand note on the necessary land, including the design, at the meeting. We did so," he said.
"We started the work after the meeting. Our contractor is on the sites now. Now they are saying that we'll have to buy the land," he added.
Mahbub said they were yet to get permission to use the government land for the project. "It will be difficult to finish the project in time if we don't get the permission," he said.