The chairman of Balfour Beatty announced his intention to quit the troubled company today after it issued its third profits warning this year.
Former Railtrack boss Steve Marshall, who has been running Balfour since the departure of chief executive Andrew McNaughton in May, highlighted a further £75 million shortfall in its UK construction arm.
The company has hired accountancy KPMG to review the division after taking additional losses and write-downs across a number of contracts.
Mr Marshall described the latest trading statement as "extremely disappointing" and said he planned to step down from the board once a new chief executive has been appointed and his own replacement is identified.
He joined the board in 2005 and has been chairman since 2008. Earlier this summer, he led Balfour's fight against a £3 billion merger with rival Carillion.
Mr Marshall said: "There has been inconsistent operational delivery across some parts of the UK construction business and that is unacceptable. Restoring consistency will take time and it has our full focus."
Nearly half of the £75 million shortfall in UK construction stems from Balfour's engineering services operation, which has been impacted by design changes, project delays, rework on projects and contractual disputes.
The division was also the subject of a £35 million downgrade in July.
Balfour said today: "We have continued to experience programme slippage, resource and skills shortages, poor operational delivery and cost inflation pressures.
"The total number of problem contracts has increased to 25, from the 21 previously disclosed. Of these, 19 are due to reach operational completion in 2014."
The troubled engineering services business, which is based in Cheadle, has worked on projects including Marks & Spencer's flagship store at Cheshire Oaks and the aquatics centre at the London 2012 Olympics site.
As well as London, the construction arm is experiencing difficulties in the South West and Wales regions. It is taking steps to reduce its exposure in these regions, including through office closures.
Across the construction business Balfour is being more selective in the work it bids for, resulting in a lower order intake.
Apart from construction services, Balfour said current trading and full year expectations remain broadly in line with its expectations.
It recently secured a deal worth £820 million to sell US professional services firm Parsons Brinckerhoff to WSP Global - five years after it bought the business for £380 million.
Up to £200 million will be returned to shareholders following the disposal but Balfour warned that the final dividend for 2014 will be reviewed to establish a level appropriate for the group's re-shaped portfolio of businesses.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article