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Dutch engineer BAM warns cost overruns on new sea lock will hit 2017 earnings

AMSTERDAM: Dutch engineering and construction firm Royal BAM warned that its 2017 profits will be “substantially lower” than in 2016, following cost overruns on a new sea lock it is building in the town of IJmuiden, near Amsterdam.
BAM shares the €600 million ($710 million) contract for the locks on a 50:50 basis with larger rival Royal VolkerWessels, which said separately its forecast for an increase in full-year core earnings remains intact despite the setback at IJmuiden.
BAM, one of Europe’s largest builders, forecast “an estimated additional project loss of around €55 million in the fourth quarter 2017.” VolkerWessels’s loss on the project amounted to €69 million, local news agency ANP reported.
The Dutch government awarded the contract to the companies in 2015 to replace the city’s 100-year old lock which connects it with port traffic from Amsterdam.
The companies said that the loss comes after they were forced to redesign the caisson or construction that holds the lock doors, with a heavier design to prevent cracking when they are lowered.
The new design requires more expensive materials and equipment, and adds personnel costs for a longer construction period, VolkerWessels said in a statement.

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