Balfour Beatty today delivered a fresh blow to investors with a £70 million profits warning and the cancellation of a £200 million share buy-back programme.
The warning - Balfour's fourth in less than a year - comes after a review of the group's UK construction division by KPMG which found shortfalls in the value of contracts.
A further assessment of risks facing the group over its deals will be announced in March when Balfour publishes full year results, when it will also review its dividend policy, as the firm seeks to shore up its balance sheet.
Shares, which have lost about a third of their value over the past year, fell before ending up five per cent on the day.
It comes 12 months after Balfour celebrated a £154 million contract to convert London's Olympic Stadium into a multi-use venue which will host rugby World Cup matches this year before becoming the home of West Ham United.
But since then it has issued four profit warnings, which including today's add up to £210 million, while chief executive Andrew McNaughton has left. New boss Leo Quinn started this month.
Mr Quinn said today's report was "an important step in drawing a line under a period of uncertainty for our customers".
He added: "I was never in doubt that there was a great deal of work to be done to restore the group to strength.
"Balfour Beatty is a large organisation which had become too complex and too devolved for adequate line of sight and financial control.
"The key is that these issues can be put right and we now have clear action plans in hand. Significant opportunity exists across the group to drive reduced costs, improved profits and strong cash generation to the full benefit of our shareholders.
"Working changes into the culture of the group will take time and discipline, but everything I have seen so far reinforces my first impressions about the depth of engineering capability in Balfour Beatty."
The KPMG report found most problems within Balfour's engineering services, its London region - including major projects - and in the South West, all units that had previously been identified as "having issues".
They related to the way in which contracts were bid for and managed and the accuracy of assumptions on how they would perform.
A shake-up to simplify the UK business will get underway with Mr Quinn taking direct control of the major construction projects division.
The latest warning is seen as likely to revive speculation about Balfour being vulnerable to a fresh takeover attempt, five months after it closed the door on an on-off £3 billion merger with Carillion.
But there was a positive note as the group upgraded the value of its public private partnership (PPP) contracts, which include long-term projects such as schools and hospitals, from £1.05 billion to £1.3 billion.
It comes a month after Balfour rejected a £1 billion bid for the division from John Laing Infrastructure Fund.
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