Consultant engineer Coffey International Ltd (ASX:COF) today announced it is going to simplify its organisation structure and further reduce operating costs to bring the company into line with fee revenue. The global professional services firm said approximately 100 positions will be made redundant.

Coffey said this program will commence immediately and is expected to be in place by the end of February 2011. The target annualised costs savings are approximately $15 million per annum.

The one-off costs to implement this program, are estimated at approximately $5.5 million, and are expected to be recognized in the half year to December 31, 2010. These costs relate to redundancy costs for people, and will also include costs associated with closure of some smaller offices. Approximately $6.5 million of operating costs savings is expected in the second half of fiscal 2011.

The company confirmed at its annual general meeting that previous cost saving programs have met their targets. However, fee revenues continue to be affected by project delays and postponements despite generally better conditions in the resources sector.

According to Coffey, "major rainfall in the eastern states of Australia has impacted a number construction projects."

The company expects that operating earning before interest, tax depreciation and amortisation (OEBITDA) for the half year to December 31, 2010, will be in the range of $16 million to $18 million before the one-off charges. This compares to an OEBITDA of $31.1 million for the corresponding period last financial year, and OEBITDA of 18.3 million for the six months to June 30, 2010.

Shares in Coffey slumped by over 8 per cent after the announcement. At 1050 AEDT, the company was trading down 10 cents, or 8.81 per cent, at $1.035.