The ranks of Downer EDI doubters surged yesterday, as the shares in the company dropped 27 per cent on news of a $260 million provision as well as asset harm charge, which includes a $190 million provision on the Reliance Rail project.

About $564 million were wiped off the market due to share price collapse, which is more than twofold the value of the write-downs. The management will start with a scheduled ''investor day'' today, as it has its work cut out to re-establish reliability.

There is a doubt that whether Reliance will be able to fund the $1.9 billion project, with a $357 million bank facility which likely to require refinancing.

Downer is not obliged to provide further equity to Reliance Rail. But market is yet not able to believe that Downer can walk away. The reputation damage would be huge, if the project failed.

Downer claimed that the project has been delayed by just five months, but the contract could be as much as 10 months behind schedule as per the market. Investors who are considering the proposed Bilfinger Berger Australia float, Downer EDI's loss-making rail contract may serve as a warning story for them.