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REVENUE RECOGNITION AND CONTRACTS
 6 Months Ended
Jun. 30, 2021
Revenue from Contract with Customer [Abstract]  
REVENUE RECOGNITION AND CONTRACTS REVENUE RECOGNITION AND CONTRACTS
Revenue Recognition

A performance obligation is a contractual promise to transfer a distinct good or service to the customer. A contract's transaction price is allocated to each distinct performance obligation and is recognized as revenue when (point in time) or as (over time) the performance obligation is satisfied.

Revenue from goods and services transferred to customers at a point in time, which includes certain aftermarket parts and services, accounted for 18% and 31% for the three months ended June 30, 2021 and 2020, respectively, and 22% and 31% of our revenue for the six months ended June 30, 2021 and 2020, respectively. Revenue from products and services transferred to customers over time, which primarily relates to customized, engineered solutions and construction services, accounted for 82% and 69% for the three months ended June 30, 2021 and 2020, respectively, and 78% and 69% of our revenue for the six months ended June 30, 2021 and 2020, respectively.

Refer to Note 3 for our disaggregation of revenue by product line.

Contract Balances

The following represents the components of our contracts in progress and advance billings on contracts included in our Condensed Consolidated Balance Sheets:
(in thousands)June 30, 2021December 31, 2020$ Change% Change
Contract assets - included in contracts in progress:
Costs incurred less costs of revenue recognized$25,766 $25,888 $(122)— %
Revenues recognized less billings to customers38,171 33,420 4,751 14 %
Contracts in progress$63,937 $59,308 $4,629 8 %
Contract liabilities - included in advance billings on contracts:
Billings to customers less revenues recognized$51,361 $61,884 $(10,523)(17)%
Costs of revenue recognized less cost incurred 1,781 2,118 (337)(16)%
Advance billings on contracts$53,142 $64,002 $(10,860)(17)%
Net contract balance$10,795 $(4,694)$15,489 (330)%
Accrued contract losses$321 $582 $(261)(45)%

Backlog

On June 30, 2021 we had $500.0 million of remaining performance obligations, which we also refer to as total backlog. We expect to recognize approximately 45.2%, 21.2% and 33.6% of our remaining performance obligations as revenue in the remainder of 2021, 2022 and thereafter, respectively.
Changes in Contract Estimates

In the three and six months ended June 30, 2021 and 2020, we recognized changes in estimated gross profit related to long-term contracts accounted for on the over time basis, which are summarized as follows:
Three months ended June 30,Six months ended June 30,
(in thousands)2021202020212020
Increases in gross profit for changes in estimates for over time contracts$2,314 $4,037 $5,339 $7,561 
Decreases in gross profit for changes in estimates for over time contracts(3,137)(5,102)(4,495)(5,288)
Net changes in gross profit for changes in estimates for over time contracts$(823)$(1,065)$844 $2,273 

B&W Renewable EPC Loss Contracts

We had six B&W Renewable EPC contracts for renewable energy facilities in Europe that were loss contracts at December 31, 2017. The scope of these EPC (Engineer, Procure and Construct) contracts extended beyond our core technology, products and services. In addition to these loss contracts, we have one remaining extended scope contract in our Babcock & Wilcox Renewable segment which turned into a loss contract in the fourth quarter of 2019.

Four of the six contracts were 100% complete and the remaining two contracts were nearly 100% complete at June 30, 2021, with only limited warranty obligations remaining, and all have been turned over to the customers. In the three months ended June 30, 2021 and 2020, we recorded $0.0 million and $0.4 million in net losses, respectively, and in the six months ended June 30, 2021 and 2020, we recorded $0.1 million in net gains and $0.3 million in net losses, respectively, inclusive of warranty expense as described in Note 10, resulting from changes in the estimated revenues and costs to complete those contracts. All liquidated damages associated with these six contracts have been settled and paid as of December 31, 2020.

In 2019, one of our other B&W Renewable energy contracts turned into a loss contract due to delays and other start-up costs prior to turnover to the client in October 2019. In the three and six months ended June 30, 2021 our estimated loss on the contract improved by $0.7 million, and in the three and six months ended June 30, 2020, we did not recognize additional charges on this contract. As of June 30, 2021, this contract was approximately 99% complete.

In September 2017, we identified the failure of a structural steel beam on a contact for a biomass plant in the United Kingdom, The engineering, design and manufacturing of the steel structure were the responsibility of our subcontractors. A similar design was also used on two other contracts, and although no structural failure occurred on these two other contracts, work was also stopped in certain restricted areas while we added reinforcement to the structures, which also resulted in delays. The total cost related to the structural steel issues on these three contracts was estimated to be approximately $36 million, which is included in the June 30, 2021 estimated losses at completion for these three contracts. We are continuing to aggressively pursue recovery of this cost from responsible subcontractors. In October 2020, we entered into a settlement agreement with an insurer under which we received a settlement of $26.0 million to settle claims in connection with five of six European B&W Renewable EPC loss contracts disclosed above.

The Company is continuing to pursue other additional potential claims where appropriate and available.

B&W Environmental Loss Contracts
At June 30, 2021, the B&W Environmental segment had two significant loss contracts, each of which are contracts for a dry cooling system for a gas-fired power plant in the United States. In the three and six months ended June 30, 2021 our estimated loss on these contracts improved by $0.4 million and in the three and six months ended June 30, 2020, we did not recognize additional charges on these contracts. As of June 30, 2021, both contracts were nearly 100% complete.