Jarvis is optimistic about its school projects

The firm has admitted that it has spent more on work than expected, especially in payments to subcontractors.

The announcement of these cost overruns caused the company's shares to slide by more than a quarter.

Secondary Heads Association boss John Dunford said schools were very wary of the staying power of commercial firms.

Jarvis's accommodation services arm is now expected to make a loss of �5m, instead of an expected �5m profit.

Finance director Robert Kendall has resigned, and the company will be hit by a �40m charge after exiting rail maintenance contracts.

Mr Dunford said: "Schools have been very wary of mortgaging their future income into commercial companies.

"Part of that worry is that the commitment of a commercial company to a contract at the outset when there are profits on the horizon and buildings to be built may wane considerably when you're into the 10th and 15th year of a 20-year contract."

On Thursday, Jarvis said it was preferred bidder on four schools projects in northern England and Wales.

But its reputation has been damaged by criticism over its safety record on railway engineering.

Last year, Jarvis pulled out of its railway maintenance contracts after its record came under the microscope following the crash at Potters Bar and derailments in London and Rotherham.

The company is still involved in the railways, however, and last month it announced it had won three contracts from Network Rail to renew track at two sites in the UK.

The company also has a stake in Tube Lines, the consortium responsible for upgrading London Underground's Piccadilly, Northern and Jubilee lines.