Shares at Interserve tumbled after the construction and outsourcing group more than doubled the charges it expects to face to exit an energy-from-waste contract in Glasgow to £160m ($199m).
The FTSE 250 company said the previous provision last May of £70m was "no longer adequate". Shares crashed by a quarter, or 83p to 252.3p in early trading.
It said the extra costs will cover various legal claims and recoveries, adding it expects "a lengthy period of litigation to ensue".
The business said it expects to substantially complete the final commissioning of the project this year, "although our contractual obligations in respect of warranties, and the resolution of claims will continue for a period thereafter".
Interserve, whose activities range from providing care services for people in their own homes to building repairs at Britain's Sandhurst military academy, said it expects further cash outflows of around £60m this year.
The charges come from its Glasgow Recycling & Renewable Energy contract, after it withdrew from the project in November after a number of delays.
The £154m plant is designed to handle 200,000 tonnes of the city's waste every year, and produce enough energy to power 22,000 households.
Interserve also warned about its growing debt. It said its average net debt has soared from £270m-£280m previously, to £390m in 2016 and is expected to climb to £450m this year.