Nearly 40 schools face delays to work on new classrooms after the contractor failed to reach agreement with a construction company.
Jarvis, which won a 25-year contract to refurbish Norfolk schools in March, has failed to secure the services of local building firm RG Carter.
Sue Rositer, deputy director of education for Norfolk County Council, said the work would still go ahead.
But she said: "We are disappointed with the set back."
She said Jarvis was now seeking another local building firm.
Improve school buildings
Jarvis, which has its head office in Hertfordshire, is to seek a new partner for the Private Finance Initiative (PFI) contract to improve buildings in 37 schools in Norfolk, after negotiations with RG Carter failed to result in a contract being signed.
The project covers eight areas of Norfolk: Swaffham, Long Stratton, Loddon, Gorleston, Great Yarmouth, Martham, Caister and Stalham and is set to deliver major improvements to school buildings.
The council appointed Jarvis as preferred bidder in December 2003.
Throughout their bidding process, Jarvis had been working with RG Carter to develop and cost the designs for the schools.
'Looking to future'
Bryan Slater, Norfolk's director of education, said: "Clearly, we share Jarvis's disappointment that they and Carters have not been able to reach an agreement.
"The county council is eager to see improved school buildings for children and staff in the schools involved as soon as possible.
"We will need to be completely satisfied with all the detail, including who the new contractor is, before we sign on the dotted line, and we're looking forward to doing so.
"This is a contract that will last for 25 years, so it's very important for all parties to get it right."
Rob Johnson, chief executive of Jarvis Accommodation Services, said: "We've tried as hard as we can to reach agreement with RG Carter on this project.
"We are now looking to the future and getting on with the task of appointing a new contractor to deliver the quality refurbishment pupils and Norfolk's wider community so deserve."
Mike Dixon, director of RG Carter, issued a statement which said: "We have worked very hard on this project over many months, but unfortunately we could not reach an agreement with Jarvis."