In a trading update to shareholders, Interserve said that the problems had dented its whole outlook on the UK construction market.
“Our expectations for the UK construction division as a whole have been significantly adversely impacted by a further deterioration in our Glasgow energy from waste contract.”
It continued: “The issues relate to the design, procurement and installation of the gasification plant, together with continuing challenges with the supply chain that will result in further cost overruns and delays. As a result the board anticipates a £70m exceptional contract provision to be taken in the first half of 2016, resulting in a similar level of cash outflow spread across 2016 and 2017. We will be pursuing every opportunity to mitigate this situation.”
Interserve signed a £146m contract with Viridor to undertake the engineering, procurement and construction of the Glasgow Recycling & Renewable Energy Centre. Completion was originally scheduled for 2016.
On top of all else, the project has also been subject to strike action in recent weeks.
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