Annual pretax profits will also fall short of the £179m forecast.
It said the contracts could cost the business up to £150m, primarily in 2017 and 2018. Of that figure, £375m relates mostly to three UK PPP projects, Carillion said, while £470m will be lost in the Middle East and Canada.
Mr Howson will remain with Carillion for up to a year to support a transition period, although he has stepped down from both his role as chief executive and the group's board.
At its lowest, the company's share price was 113.80p.
As a result of the review and the profit warning, Carillion said revenue for the year is now expected to be between £4.8 billion and £5 billion, with overall group performance expected to be below management expectations.
A host of major players including Sir Paul Marshall's Marshall Wace, fund giant Blackrock and George Soros's SFM UK had lined up big bets against Carillion, borrowing shares in the firm to sell in the market in the hope of buying them back more cheaply later and booking a profit.
Carillion said it would withdraw from construction public-private partnership (PPP) projects and pull out of building projects in Qatar, Saudi Arabia and Egypt.
"We have concluded that we must take immediate action to accelerate the reduction in average net borrowing and are announcing a comprehensive programme of measures to address that, aimed at generating significant cashflow in the short-term", said group chairman Philip Green.
"In addition, we are also announcing that we are undertaking a thorough review of the business and the capital structure, and the options available to optimise value for the benefit of shareholders".
The firm reported a 5% fall in pre-tax profits to £146.7 million previous year and has previously said the pace of new order intakes has slowed since the Brexit vote. Despite the group's best efforts, debt is continuing to climb, and at an increasing rate, while the construction business seems to be hitting one hurdle after another.
Laith Khalaf, senior analyst at Hargreaves Lansdown, added: "Judging by this announcement, the board are prepared to do everything it takes in order to save the ship. But talk of a review of capital structure, and the ongoing debt problem, will leave investors anxious that a significant rights issue could be on the horizon".