11. 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 perform a defined scope of a 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 require the Company to 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 16 –Segment Information to the Financial Statements.

The components of the Company’s revenue by contract type were as follows for the year ended December 31:


	2019
	T&D				C&I				Total
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	564,251	49.7	%	$	704,743	75.2	%	$	1,268,994	61.3	%
Unit price		228,223	20.1			54,433	5.8			282,656	13.6
T&E		316,943	27.9			101,770	10.9			418,713	20.2
Other		24,994	2.3			75,802	8.1			100,796	4.9
	$	1,134,411	100.0	%	$	936,748	100.0	%	$	2,071,159	100.0	%


	2018
	T&D				C&I				Total
(dollars in thousands)	Amount		Percent		Amount		Percent		Amount		Percent
Fixed price	$	361,699	40.5	%	$	452,732	71.0	%	$	814,431	53.2	%
Unit Price		181,179	20.3			51,590	8.1			232,769	15.2
T&E		305,581	34.2			34,938	5.4			340,519	22.2
Other		44,649	5.0			98,801	15.5			143,450	9.4
	$	893,108	100.0	%	$	638,061	100.0	%	$	1,531,169	100.0	%

The components of the Company’s revenue by market type were as follows for the year ended December 31:


	2019					2018
(dollars in thousands)	Amount		Percent		Segment	Amount		Percent		Segment
Transmission	$	772,609	37.3	%	T&D	$	559,467	36.5	%	T&D
Distribution		361,802	17.5		T&D		333,641	21.8		T&D
Electrical construction		936,748	45.2		C&I		638,061	41.7		C&I
Total revenue	$	2,071,159	100.0	%		$	1,531,169	100.0	%

Remaining Performance Obligations

On December 31, 2019, the Company had $1.41 billion of remaining performance obligations. The Company’s remaining performance obligations includes 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 that amount of remaining performance obligations as of December 31, 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 as of
	December 31, 2019
			Amount estimated to
			not be recognized
(in thousands)	Total		within 12 months
T&D	$	381,850	$	45,678
C&I		1,027,193		260,837
Total	$	1,409,043	$	306,515

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 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report.