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Mowlem has called in financial consultant NM Rothschild to advise it on its options in the wake of the 拢70m loss on problem contracts, revealed earlier this week.

Rothschild, which also acted as an adviser to Jarvis before its 拢350m debt-for-equity swap with its creditors, is thought to be exploring a number of options.

These are believed to include the sale of existing contracts 鈥� the action taken by Jarvis鈥� chief executive Alan Lovell 鈥� and a trade sale of all or parts of the company.

Simon Vivian, Mowlem鈥檚 chief executive, played down the implications of the appointment of Rothschild this week. He said: 鈥淲e receive advice from a range of people on specific issues.鈥�

He said that a debt-for-equity swap at Mowlem was not on the agenda, nor was the option of raising more money from shareholders.

However, he added: 鈥淭he board is reviewing the strategic options and we would not rule anything out.

We are looking at the range of alternatives.鈥�

Gleeson went down the disposal route after its construction division announced a 拢17m loss in March. That result was followed by a sale of the division to its management.

Mowlem announced on Tuesday that it was to take a 拢70m hit on contracts, and also warned that it was unlikely that an interim dividend would be paid out to shareholders when it announced its half-year results next Wednesday.

It had warned the City in July that it was not going to meet expectations, and that it would make losses on some contracts, but at that time they estimated them to be about 拢20m.

Vivian said the earlier figure was wide of the mark because of the large number of contracts that had had to be reviewed, and the lack of standard accounting rules across the business.

Mowlem appointed accountant Ernst & Young to come up with standard rules, which Vivian said would 鈥渄raw a line under鈥� the issue.

Howard Seymour, an analyst at Bridgewell Securities, said there was less potential for mistakes in the future, but added: 鈥淭his is a big number and we need reassurance that this will be the end of it.鈥�

Despite the bad news, shares in Mowlem dropped less than 2% to 148p on Tuesday and more than recovered on Wednesday, up almost 3% to 152p.

Industry sources said the company would be very pleased with that, but warned that the story would 鈥渞un and run鈥�.

It has been a difficult year for Mowlem, which in March reported a 拢7.4m loss for 2004. It blamed this on poorly performing UK contracts in its M&E business.

Vivian joined Mowlem at the start of this year from materials company Hanson, but operated alongside his predecessor, John Gains.

Despite its troubles, Mowlem said on Tuesday that it had been selected as preferred bidder for the 拢1bn Northwood PFI project for the Ministry of Defence. Vivian said he was pleased to have secured the contract, and was not concerned that he had won such a large project at such an uncertain time.

The company said its order book stood at 拢2.3bn and that it had changed its risk management processes to improve the quality of work it took on. Mowlem said it would explain its accounting rules for recognising income in its interim report next week.