Home-grown builder Or Kim Peow (OKP) Contractors will no longer complete a viaduct in Changi which collapsed last July.
The Land Transport Authority (LTA), which awarded OKP the project for the lowest bid of $94.6 million in 2015, said yesterday both sides have "mutually agreed" to terminate the contract.
The decision came barely two months after the construction company and five people were charged in court over their role in the collapse. The accident killed one worker and injured 10 others.
The LTA said it will call a replacement tender later this month, and plans to award the contract by the fourth quarter of this year.
It is aiming to complete the viaduct, which links the Tampines Expressway (TPE) to the Pan-Island Expressway (PIE) and Upper Changi Road East, by the first half of 2022.
Before the accident, the elevated road was targeted to be completed by early 2020.
The replacement contractor will be responsible for completing the construction of the viaduct, including the demolition of any structures deemed unsafe.
In the interim, the site will be maintained by an LTA term contractor "until the replacement contractor is appointed".
The regulator added that it will "continue to work closely with its contractors to ensure that they comply with workplace safety and health requirements".
Investigations immediately after the tragedy found cracks at 11 locations on load-bearing corbels at the worksite.
On May 30, the LTA said all crossheads on the uncompleted viaduct will be demolished. A crosshead is the horizontal beam on top of a pillar which supports an elevated structure such as a road.
The LTA said more parts of the viaduct structure may be pulled down if they are deemed unsafe.
In an announcement to the Singapore Exchange yesterday, listed OKP said the termination is expected to have "a negative impact on the earnings per share and net tangible assets of the company and the subsidiary for the current financial year ending Dec 31".
Industry watchers said OKP may have to pay damages, and will be liable for additional costs incurred by the new contractor - if those costs are linked to unsafe structures which OKP built.
Mr Kirindeep Singh, a senior partner of law firm Dentons Rodyk with experience in construction cases, expects the damages to be "substantial". Besides liquidated damages for a two-year delay to the project, OKP is likely to have to bear costs associated with rectification works to be carried out by the new contractor before it can complete the project.
An LTA spokesman confirmed that it will recover "appropriate costs from OKP", but the details are "confidential".
Meanwhile, motorist Sarjeet Singh said that he feels "angry" about the delay, and having to put up with "morning jams caused by the bottleneck from the TPE into the PIE and Changi" for an additional two years.
The 52-year-old lawyer said: "I use the back roads but those too are packed, although not as bad."