7. Revenue Recognition

Disaggregation of Revenue

A majority of the Company’s revenues are earned through contracts with customers that normally provide for payment upon completion of specified work or units of work as identified in the contract. Although there is considerable variation in the terms of these contracts, they are primarily structured as fixed-price contracts, under which the Company agrees to do the entire project for a fixed amount, or unit-price contracts, under which the Company agrees to do the work at a fixed price per unit of work as specified in the contract. The Company also enters into time-and-equipment and time-and-materials contracts under which the Company is paid for labor and equipment at negotiated hourly billing rates and for other expenses, including materials, as incurred at rates agreed to in the contract. Finally, the Company sometimes enters into cost-plus contracts, where the Company is paid for costs plus a negotiated margin. On occasion, time-and-equipment, time-and-materials and cost-plus contracts include a guaranteed not-to-exceed maximum price.

Historically, fixed-price and unit-price contracts have had the highest potential margins; however, they have had a greater risk in terms of profitability because cost overruns may not be recoverable. Time-and-equipment, time-and-materials and cost-plus contracts have historically had less margin upside, but generally have had a lower risk of cost overruns. The Company also provides services under master service agreements (“MSAs”) and other variable-term service agreements. MSAs normally cover maintenance, upgrade and extension services, as well as new construction. Work performed under MSAs is typically billed on a unit-price, time-and-materials or time-and-equipment basis. MSAs are typically one to three years in duration; however, most of the Company’s contracts, including MSAs, may be terminated by the customer on short notice, typically 30 to 90 days, even if the Company is not in default under the contract. Under MSAs, customers generally agree to use the Company for certain services in a specified geographic region. Most MSAs include no obligation for the contract counterparty to assign specific volumes of work to the Company and do not require the counterparty to use the Company exclusively, although in some cases the MSA contract gives the Company a right of first refusal for certain work. Additional information related to the Company’s market types is provided in Note 11–Segment Information.

The components of the Company’s revenue by contract type for the three months ended September 30, 2019 and 2018 were as follows:


	Three Months Ended September 30, 2019
	T&D				C&I				Total
( dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	157,357	53.4	%	$	220,872	76.6	%	$	378,229	64.9	%
Unit price		49,392	16.7			19,518	6.8			68,910	11.8
T&E		84,299	28.6			32,868	11.4			117,167	20.1
Other		3,892	1.3			15,016	5.2			18,908	3.2
	$	294,940	100.0	%	$	288,274	100.0	%	$	583,214	100.0	%


	Three Months Ended September 30, 2018
	T&D				C&I				Total
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	82,058	36.9	%	$	132,439	74.8	%	$	214,497	53.7	%
Unit price		42,751	19.2			14,256	8.1			57,007	14.3
T&E		76,520	34.4			9,431	5.3			85,951	21.5
Other		21,202	9.5			20,880	11.8			42,082	10.5
	$	222,531	100.0	%	$	177,006	100.0	%	$	399,537	100.0	%

The components of the Company’s revenue by contract type for the nine months ended September 30, 2019 and 2018 were as follows:


	Nine Months Ended September 30, 2019
	T&D				C&I				Total
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	410,253	49.8	%	$	469,700	69.4	%	$	879,953	58.7	%
Unit price		152,748	18.6			42,361	6.3			195,109	13.0
T&E		237,448	28.8			82,592	12.2			320,040	21.3
Other		22,949	2.8			82,033	12.1			104,982	7.0
	$	823,398	100.0	%	$	676,686	100.0	%	$	1,500,084	100.0	%


	Nine Months Ended September 30, 2018
	T&D				C&I				Total
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	238,723	37.5	%	$	312,033	69.5	%	$	550,756	50.8	%
Unit price		130,058	20.5			39,314	8.8			169,372	15.6
T&E		224,938	35.4			27,830	6.2			252,768	23.3
Other		42,123	6.6			69,805	15.5			111,928	10.3
	$	635,842	100.0	%	$	448,982	100.0	%	$	1,084,824	100.0	%

The components of the Company’s revenue by market type for the three months ended September 30, 2019 and 2018 were as follows:


	Three Months Ended September 30, 2019					Three Months Ended September 30, 2018
(dollars in thousands)	Amount		Percent		Segment	Amount		Percent		Segment
Transmission	$	196,083	33.6	%	T&D	$	121,619	30.4	%	T&D
Distribution		98,857	17.0		T&D		100,912	25.3		T&D
Electrical construction		288,274	49.4		C&I		177,006	44.3		C&I
Total revenue	$	583,214	100.0	%		$	399,537	100.0	%

The components of the Company’s revenue by market type for the nine months ended September 30, 2019 and 2018 were as follows:


	Nine Months Ended September 30, 2019					Nine Months Ended September 30, 2018
(dollars in thousands)	Amount		Percent		Segment	Amount		Percent		Segment
Transmission	$	553,314	36.9	%	T&D	$	377,780	34.8	%	T&D
Distribution		270,084	18.0		T&D		258,062	23.8		T&D
Electrical construction		676,686	45.1		C&I		448,982	41.4		C&I
Total revenue	$	1,500,084	100.0	%		$	1,084,824	100.0	%

Remaining Performance Obligations

As of September 30, 2019, the Company had $1.27 billion of remaining performance obligations. The Company’s remaining performance obligations include projects that have a written award, a letter of intent, a notice to proceed or an agreed upon work order to perform work on mutually accepted terms and conditions.

The following table summarizes the amount of remaining performance obligations as of September 30, 2019 that the Company expects to be realized and the amount of the remaining performance obligations that the Company reasonably estimates will not be recognized within the next twelve months.


	Remaining Performance Obligations at September 30, 2019
			Amount estimated to not be		Total at
(in thousands)	Total		recognized within 12 months		December 31, 2018

T&D	$	368,865	$	27,018	$	418,178
C&I		899,859		208,699		644,547
Total	$	1,268,724	$	235,717	$	1,062,725

The Company expects a vast majority of the remaining performance obligations to be recognized within twenty-four months, although the timing of the Company’s performance is not always under its control. Additionally, the difference between the remaining performance obligations and backlog is due to the exclusion of a portion of the Company’s MSAs under certain contract types from the Company’s remaining performance obligations as these contracts can be canceled for convenience at any time by the Company or the customer without considerable cost incurred by the customer. Additional information related to backlog is provided in Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”