The contractor also revealed that its office closure and redundancy programme would cost £10m this year as it aimed for annual savings of £55m.

In a trading statement, the firm said: “Since the half year we have experienced further market deterioration, which has impacted the short-term outlook for the group into 2013.

“However the group’s confidence in the medium-term outlook from 2014 onwards has increased through its success in securing a number of longer-term opportunities in growing sectors of the market.”

Chief Executive, John Morgan said: “My focus will be on growing the business and ensuring that exceptional levels of service continue to be delivered to clients across the group. I would also like to add a personal thanks to Paul, with whom I have enjoyed working over many years.”

In the boardroom reshuffle senior independent director, Adrian Martin, becomes new non-executive chairman and Patrick De Smedt has been appointed senior independent director.

Morgan co-founded Morgan Lovell in 1977 which then reversed into William Sindall in 1994 to form Morgan Sindall. He ran the contractor as chief executive from 1994 to 2000 before becoming executive chairman in 2000 and handing over to Smith.

In its statement, which fell just short of a profit warning, the firm said: “Since the half year we have experienced further market deterioration, which has impacted the short-term outlook for the group into 2013.”

“The board expects underlying trading for this year to be slightly below previous expectations before taking into account a £7m gain from the sale of the group’s medical property interests in July.”

The firm’s share price dropped 7% during early trading this morning.

Morgan Sindall is reorganising its construction business to operate from regional hub offices, closing its smaller offices.

So far the firm has closed its Durham office and confirmed plans to close Ashford, Banbury, Bristol and Theale (Reading).

Housing arm Lovell also merged regional operations last month as a raft of senior directors was made redundant.

While construction and affordable housing workloads were being challenged, the firm said the development pipeline for its Muse and Investments arms had strengthened to £2.1bn, with a further £1.1bn of major schemes at preferred bidder stage.