Construction Contracts

6 Months Ended

Jun. 30, 2023

Contractors [Abstract]

Construction Contracts

Construction Contracts

Construction contract costs and estimated earnings in excess of billings represent reimbursable costs and amounts earned under contracts in progress as of the balance sheet date. Such amounts become billable according to contract terms, which usually consider the passage of time, achievement of certain milestones, or completion of the project. The Company expects to bill and collect substantially all construction contract costs and estimated earnings in excess of billings as of June 30, 2023 during the next 12 to 24 months.  

Billings in excess of construction contract costs and estimated earnings represent billings or collections on contracts made in advance of revenue recognized.

The following table summarizes the changes to the balances in the Company’s construction contract costs and estimated earnings in excess of billings account and the billings in excess of construction contract costs and estimated earnings account for the six months ended June 30, 2023 and 2022 (in thousands):

	Six Months Ended  June 30, 2023				Six Months Ended  June 30, 2022
	Construction contract costs and estimated earnings in excess of billings		Billings in excess of construction contract costs and estimated earnings		Construction contract costs and estimated earnings in excess of billings		Billings in excess of construction contract costs and estimated earnings
Beginning balance	$	342	$	17,515	$	243	$	4,881
Revenue recognized that was included in the balance at the beginning of the period	—		(17,515)		—		(4,881)
Increases due to new billings, excluding amounts recognized as revenue during the period	—		19,282		—		15,442
Transferred to receivables	(343)		—		(361)		—
Construction contract costs and estimated earnings not billed during the period	406		—		493		—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	1		(971)		118		(367)
Ending balance	$	406	$	18,311	$	493	$	15,075

The Company defers pre-contract costs when such costs are directly associated with specific anticipated contracts and their recovery is probable. Pre-contract costs of $1.7 million and $1.3 million were deferred as of June 30, 2023 and December 31, 2022, respectively. Amortization of pre-contract costs for the six months ended June 30, 2023 and 2022 was $0.3 million and $0.5 million, respectively.

Construction receivables and payables include retentions, which are amounts that are generally withheld until the completion of the contract or the satisfaction of certain restrictive conditions such as fulfillment guarantees. As of June 30, 2023 and December 31, 2022, construction receivables included retentions of $32.1 million and $8.3 million, respectively. The Company expects to collect substantially all construction receivables outstanding as of June 30, 2023 during the next 12 to 24 months. As of June 30, 2023 and December 31, 2022, construction payables included retentions of $36.5 million and $24.7 million, respectively. The Company expects to pay substantially all construction payables outstanding as of June 30, 2023 during the next 12 to 24 months.

The Company’s net position on uncompleted construction contracts comprised the following as of June 30, 2023 and December 31, 2022 (in thousands):

	June 30, 2023		December 31, 2022
Costs incurred on uncompleted construction contracts	$	499,099	$	571,465
Estimated earnings	18,238		22,162
Billings	(535,242)		(610,800)
Net position	$	(17,905)	$	(17,173)
Construction contract costs and estimated earnings in excess of billings	$	406	$	342
Billings in excess of construction contract costs and estimated earnings	(18,311)		(17,515)
Net position	$	(17,905)	$	(17,173)

The above table reflects the net effect of projects closed as of June 30, 2023 and December 31, 2022, respectively.

The Company’s balances and changes in construction contract price allocated to unsatisfied performance obligations (backlog) as of June 30, 2023 and 2022 were as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Beginning backlog	$	651,840	$	419,439	$	665,564	$	215,518
New contracts/change orders	43,975		167,143		114,767		395,746
Work performed	(103,029)		(45,368)		(187,545)		(70,050)
Ending backlog	$	592,786	$	541,214	$	592,786	$	541,214

The Company expects to complete a majority of the uncompleted contracts in place as of June 30, 2023 during the next 12 to 24 months.