My fiesta suddenly lost power on Friday and displayed the engine management warning light. I managed to get the car to a ford dealer and i have been told today that the turbo failed and as a result of this oil has made its way into the engine. They are saying that the engine now needs replacing for around £5,500 if they carry out the work. This is more than the car is worth so i am looking around for alternatives. Does anybody have any experience of engine reconditioning companies and any recommendations would be much appreciated?  

Take it to a local indie rather than Ford. It'll cost half as much. If the car ran prior to taking it to Ford I'm not sure the whole engine would need replacing. If oil got into the cylinders then you'll be seeing blue smoke out the exhaust. Only way I'd see you needing a new engine is if you managed to hydraulically lock it, although you'd have heard a big bang as something smashed through the side of the block and would be completely undriveable.

I'm pretty sure you can pick up engines from Ford for around £1500 not including VAT. As these 1 litres have been going wrong for quite a while now. I don't think this includes the turbo but they aren't that much either. I think they are ripping you off

The turbocharger removal and refitting is in the haynes manual and is given 3 out of 5 spanners, so can be changed by a competent diy mechanic. Second hand parts are on ebay for 100 pounds.

Try changing just the part and see what happens.