Contractor's profits are affected by unexpected charges on three PPP schemes in the UK

Skanska has announced a £27m write down relating to three PPP projects in the UK.

The Swedish contractor said the charges in the first quarter of 2008 related to three fixed price contracts. It said changes in the 'project scope' meant costs had to rise to complete the schemes on time.

Skanska said it had failed to reach a settlement with clients and subcontractors over who was responsible for the increased costs.

Johan Karlström, Skanska president and CEO, said: “This type of fixed price contracts with long durations has traditionally resulted in higher than average margins but with greater risks."

"These events highlight the importance of that we continue to further improve our risk management for this type of projects.”

Skanska reported a preliminary operating income of £779m in the first quarter of the year. Construction revenues rose by 14% to £26.75m.