The company flagged a pre-tax loss of $A7-9 million for the period, higher than the $5 million loss before tax posted in the June half-year.

VDM said the greatest impact had been the outcome of contract claims and variations that had not been resolved at a value the company expected and the necessity to increase provisions relating to unrecoverable amounts on engineering and property development activities not previously provided for.

The company said some of those issues remained in dispute and could still be resolved in its favour.

VDM said it had also been impacted by accommodation shortages on a site where two projects were being built in Western Australia, resulting in a scope reduction on one and labour limitations on the other.

The company didn’t name the project but it does have contracts in WA with iron ore clients BHP Billiton, Rio Tinto, CITIC Pacific Mining and Karara Mining.

VDM also outlined a relatively gloomy outlook.

“The current market volatility in the resource sector is expected to result in a reduction in the volume of new construction work available and that the company expected to be awarded, particularly in Western Australia,” the company said.

As a result, the company said it would be required to review the carrying value of certain assets during the first half, which may lead to an impairment of goodwill and a reduction in the carrying value of deferred tax, which had not been included in the earnings guidance.

VDM said it would not affect its cash balance of $20 million and its external debt level remained low at less than $2 million.

Last month VDM said this financial year was critical for it in achieving a turnaround of its results and as a result of today’s news the company initiated a cost review.

VDM managing director Andrew Broad said the review had identified areas of improvement but had resulted in the loss of more than 40 jobs.

The redundancies would save VDM around $5.5 million annually for a one-off cost of $1.2 million.

The first-half forecast included the redundancy costs.

“Maintaining a competitive cost base is paramount in the industry in which we operate and these cost management decisions have not been taken lightly but have been required in the best interests of VDM's shareholders," Broad said.

"Activities associated with ongoing improvements to how we estimate projects at the time of tender and better delivery on projects will continue to progress despite the reduction in staff.

"We are seeing the benefits of these improvements internally but their impact on the financial performance of the business is taking longer to achieve than originally anticipated than when the turnaround process commenced."