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Note 5 - Revisions in Estimates

9 Months Ended

Sep. 30, 2020

5. Revisions in Estimates

Our profit recognition related to construction contracts is based on estimates of transaction price and costs to complete each project. These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, and uncertainties are resolved. Changes in estimates of transaction price and costs to complete may result in the reversal of previously recognized revenue if the current estimate adversely differs from the previous estimate. When we experience significant changes in our estimates, we undergo a process that includes reviewing the nature of the changes to ensure that there are no material amounts that should have been recorded in a prior period rather than as revisions in estimates for the current period. For revisions in estimates, generally we use the cumulative catch-up method for changes to the transaction price that are part of a single performance obligation. Under this method, revisions in estimates are accounted for in their entirety in the period of change. There can be no assurance that we will not experience further changes in circumstances or otherwise be required to revise our estimates in the future. Other than those identified in the 2019 Annual Report on Form 10-K, we did not identify any material amounts that should have been recorded in a prior period for the three and nine months ended September 30, 2019. In our review of these changes for the three and nine months ended September 30, 2020, we did not identify any material amounts that should have been recorded in a prior period.

In the normal course of business, we have revisions in estimates, including estimated costs some of which are associated with unresolved affirmative claims and back charges. The estimated or actual recovery related to these estimated costs may be recorded in future periods or may be at values below the associated cost, which can cause fluctuations in the gross profit impact from revisions in estimates.

There were no increases from revisions in estimates, which individually had an impact of $5.0 million or more on gross profit, for the periods presented.

The projects with decreases from revisions in estimates, which individually had an impact of $5.0 million or more on gross profit, are summarized as follows (dollars in millions except per share data):

	*Three Months Ended September 30,*				*Nine Months Ended September 30,*
			*As Restated*				*As Restated*
	*2020*		*2019*		*2020*		*2019*
Number of projects with downward estimate changes		3		4		6		10
Range of reduction in gross profit from each project, net	$	7.2 - 17.8	$	5.6 - 13.6	$	6.5 - 37.6	$	5.9 - 48.0
Decrease to project profitability	$	32.2	$	37.0	$	107.5	$	162.5
Increase to net loss	$	21.7	$	29.0	$	72.6	$	127.6
Increase to net loss per diluted share	$	0.48	$	0.62	$	1.59	$	2.73

Other than one project in our Specialty segment during the three and nine months ended September 30, 2020, all decreases during the three and nine months ended September 30, 2020 were in our Transportation segment and were due to additional costs from differing site conditions, lower productivity than originally anticipated and unfavorable weather. The decreases during the three and nine months ended September 30, 2019 were due to increased project completion costs, schedule delays, lower productivity than originally anticipated and performance of a significant amount of disputed work partially offset by an increase in estimated recovery from customer affirmative claims.