Construction group Murray & Roberts (M&R) on Monday announced that it had reached a settlement related to one of the lossmaking projects that had dragged the once profitable JSE-listed group into the red three years ago, forcing a multiyear turnaround plan.

The company reached an undisclosed negotiated financial settlement with Boskalis Australia on all claims and counter claims related to the beleaguered Gorgon Pioneer Materials Offloading Facility (GPMOF) project, in Australia.

Negotiations between the parties had led to the settlement a month before the scheduled July 7 hearing in a Western Australia court.

“The agreement provides for two payments, [at the] end [of] June and [at the] end [of] September 2014. The June payment settles the uncertified revenue taken to book on GPMOF during previous financial years,” the construction group said.

The cost to complete the lossmaking GPMOF project, which wrapped up in 2012, significantly surpassed the tendered prices, as the project had strayed from its original scope.

The project experienced design changes and adverse weather conditions, in addition to a slower-than-expected progress rate on the piling works, with ground conditions said to be different to what the company, which had late access to the construction site, had tendered on.

“The implementation of this project turned out to be very different to what we envisaged at tender stage and we will work very hard to recover our entitlement here,” the company said in a previous statement.

In 2011, M&R plunged into the red with a loss of nearly R2-billion, with recovery only emerging in 2013, when the company returned to profitability after absorbing the bulk of the financial impact of the lossmaking projects.

The cash outlay of more than R2-billion on the GPMOF project represented one of the largest single cash losses for the company in recent times and M&R headed into arbitration with the main contractor, Boskalis, and the client, Chevron, in an attempt to resolve its claims.

Last year, CEO Henry Laas explained that M&R had taken on some major projects during the boom that, at the time, did not pose significant risks or negative consequences for the group.

The company had committed to settling its other claims from projects that had left the company “with some scars.”

The Dubai Airport project, which was handed over to the client in 2008, was in arbitration, with a settlement only expected in 2016 as discussions for a negotiated settlement continued with the authorities in the Middle Eastern country.

The company previously stated that had the Middle East not hit recession, the project would have been a success story for the group’s portfolio.

The second problematic project was the multibillion-rand Gautrain rapid-rail link.

M&R is a member of the Bombela consortium, which built, and now operates, the R26.4-billion Gautrain rapid-rail system on behalf of the provincial government.

During construction, the land needed for the project was not made available on time and in sequence, which increased the cost to the contractors “substantially more” than the tendered costs.

The delay and disruption claim filed by the Bombela consortium against the Gauteng government regarding the construction of the Gautrain “was taking a long time”, and would only be resolved by 2016, Laas warned earlier this year.

In August 2013, the construction and engineering group had said it expected a resolution, through arbitration, by December 2014.