In the latest set of half-year results, the firm said the heavy one-off cost would be offset by a £6m saving in annual overheads.

Already the contractor has spent £1.7m of the expected total bill for restructuring the two businesses under the new Morgan Sindall banner.

Group profits for the first half of 2010 slid 10% to £23.1m on turnover down 14% to £980m.

The fall in profits and sales was largely down to the new division, where civil engineering experienced a tough time following major infrastructure project delays and the AMP5 water spending review.

Construction businesses, largely Morgan Ashurst, in the new division delivered a record first half profit of £6.3m, up 11% on the previous year, with margins edging up to 1.8%.

But a hiatus in water spending and other civil engineering projects saw profits fall a third to £5.9m at the infrastructure business.

Despite the challenging outlook for this part of  Sindall, the  order book is up 31% at  £2.1bn on the start of the year.

John Morgan, executive chairman, said: “While we are conscious that market conditions remain challenging, our financial strength, breadth of capabilities and leading positions across a range of market sectors leave us well placed to capture further market share.”We look to the future with confidence.”

He said that as expected the construction group saw softened demand as public spending cuts began to have an impact.

Fit out benefitted from a recovery in demand for larger projects in London, with the professional and financial services sectors leading the increase in activity.

In affordable housing, demand for new build social housing and refurbishment has remained firm although the private housing market remains constrained by the lack of availability of mortgage finance.

Despite the fall in turnover Morgan Sindall, cash at June stood at £138m, up nearly £50m on last year.

An increase in revenue from fit out and careful management of housing inventories at the affordable housing division saw average cash treble to £61m, compared to the previous year.