GALLIFORD Try saw losses in its construction arm widen by 11 per cent in the first half of the current financial year as it was forced to write down further costs in relation to the construction of the Aberdeen Western Peripheral Route (AWPR).

The FTSE 250 business was originally one of three contractors retained by the Scottish Government’s transport agency Transport Scotland to work on the 28-mile bypass round the city of Aberdeen, with it, Balfour Beatty and Carillion agreeing to complete the project for a fixed fee of £750 million.

When Carillion went bust in January 2018, however, Balfour Beatty and Galliford Try became jointly liable for the project and, with costs ballooning to £1 billion as the result of a number of delays, both firms have booked extra losses in the wake of Carillion’s liquidation.

Having already written down an additional £45m of costs in the year to June 2018 as a result of inheriting half of Carillion’s stake in the project, Galliford Try has provided for a further exceptional cost of £26m for the six months to the end of December. Similarly, Balfour Beatty, which is due to report its full-year results next month, booked an additional loss of £44m in 2017 and £23m in the first half of 2018.

The increased costs came as Galliford Try’s construction division, which accounts for around half of the business’s overall revenue figure, saw its losses widen from £17.8m in the first half of 2017/18 to £19.7m in the first half of 2018/19.

Despite the write-downs, Galliford Try chief executive Peter Truscott wrote in the company’s first-half report that the final impact the road project will have on the business’s financial results is yet to be determined, with it and Balfour Beatty in the process of pursuing “a significant claim on this contract”.

“Constructive dialogue with the client on the significant claims in respect of the contract are continuing,” he said.

“Our provisioning for the loss on this project reflects our current estimate of the final costs, and is reduced by an estimate of our share of significant claims against the client and others, which are yet to be agreed and concluded.

“This inherent uncertainty will be resolved only when the project is complete and the claims finally settled.”

Although construction work on the AWPR is finished, the section crossing the River Don, which had to be repaired at the end of last year after it was found to be defective, remains unopened.

Last month transport secretary Michael Matheson said that section would not open until “ministers receive the necessary assurances about the longer-term impact of the remedial work and the changed costs of future maintenance”, adding that the government was “not prepared to pick up the tab for mistakes made by construction companies”.

Despite the widening losses in its construction arm, Galliford Try, which also operates housebuilding and affordable homes divisions, made an overall pre-tax profit of £53.8m for the six months to the end of December, down 4% from £56.3m the previous year. Overall revenues were down by 5%, from £1.5bn to £1.4bn.

Linden Homes reported a 5% reduction in profits to £76.8m while Galliford Try’s Partnerships and Regeneration business saw profits rise by 34% to £14.5m.

Mr Truscott said that Linden Homes had performed well “despite the continuing political uncertainty and its impact on confidence”, helped in part by the UK and Scottish governments’ Help to Buy schemes and “a strong mortgage market”.

He added that the Partnerships and Regeneration business “is performing very strongly, both at revenue and margin levels”.

“Opportunities for the business continue to grow, underpinned by our strong relationships with providers and funders, our growing geographical footprint and by cross-party political support for affordable housing,” Mr Truscott added.