BOL

PANDASEQ assembles paired-end Illumina reads into sequences, trying to correct for errors and uncalled bases. The assembler reads two files in FASTQ format with quality information. If amplification primers were used (e.g., to isolate a variable region of the 16S gene, or the constant regions around zinc finger binding residues), they can be removed from the sequence during assembly. The final sequence will correct any uncalled bases in the overlapping region using the complementary strand. When mismatches occur in the overlapping region, the base with the better quality score is chosen.
The algorithm is as follows:

1.Find the positions where the forward and reverse primers match best above the threshold and discard the ends of the sequence, including the primer.
2.Pick and overlap to maximise the probability of the forward and reverse reads having come from a single piece of DNA.
3.Identify the masking of the end of the read with the quality score B or # as done by CASAVA and adjust the probabilities in this region.
4.Construct an assembled sequence between the primers and calculate the quality.
5.Check for various constraints, including quality, length, uncalled bases, and user-supplied modules.

http://neufeldserver.uwaterloo.ca/~apmasell/pandaseq_man1.html