NOTE 5—PROJECT CHANGES IN ESTIMATES

Our RPOs for each of our operating groups generally consist of several hundred contracts and our results may be impacted by changes in estimated margins. The following is a discussion of our most significant changes in cost estimates that impacted segment operating income for the three and six months ended June 30, 2018 and 2017.

Three months ended June 30, 2018

Segment operating income for the three months ended June 30, 2018 was positively impacted by net favorable changes in estimates totaling approximately $84 million, primarily in our MENA and APAC segments.

MENA—Our segment results were positively impacted by net favorable changes in estimates aggregating approximately $39 million, primarily due to productivity improvements on marine, fabrication and other activities, primarily on two of our projects and savings on several other projects in the Middle East that were not individually significant.

APAC—Our segment results were positively impacted by net favorable changes in estimates aggregating approximately $46 million, primarily due to:

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costs savings from marine campaigns on a project off the Australian coast; and

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cost savings upon the substantial completion of pipelay and offshore construction campaign on the Greater Western Flank Phase 2 project in Australia, partly offset by the impact of weather related delays on the project.

Six months ended June 30, 2018

Segment operating income for the six months ended June 30, 2018 was positively impacted by net favorable changes in estimates totaling approximately $121 million, primarily in our MENA and APAC segments.

MENA—Our segment results were positively impacted by favorable changes in estimates aggregating approximately $69 million, primarily due to:

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productivity improvements on marine, fabrication and other activities, primarily on two of our projects and savings on several other projects in the Middle East that were not individually significant;

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cost savings associated with fabrication, procurement and marine campaigns on two Saudi Aramco lump-sum EPCI projects under the second Saudi Aramco Long Term Agreement (“LTA II”);

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savings associated with marine campaigns, reimbursement for costs incurred and reduction in estimated costs to complete multiple projects in the Middle East, none of which were individually material;

These favorable changes in estimates were partially offset by higher estimated costs associated with;

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hook-up and marine campaigns on two Saudi Aramco projects; and

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standby equipment and mechanical equipment downtime on Middle East projects.

APAC—Our segment results were positively impacted by favorable changes in estimates aggregating approximately $55 million. This included a net reduction in estimates of costs to complete on offshore campaigns and several other active projects, partially offset by additional costs associated with weather downtime on two active projects.

Three and six months ended June 30, 2017

Segment operating income for the three and six months ended June 30, 2017 was positively impacted by net favorable changes in estimates totaling approximately $32 million and $79 million, respectively, primarily in our MENA (approximately $20 million and $36 million, respectively) and APAC (approximately $16 million and $41 million, respectively) segments.