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PROJECT CHANGES IN ESTIMATES
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
PROJECT CHANGES IN ESTIMATES

NOTE 6—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, 2019 and 2018. For discussion of significant changes in estimates resulting from changes in transaction prices, see Note 5, Revenue Recognition.

Three and six months ended June 30, 2019

Segment operating income for the three and six months ended June 30, 2019 was impacted by net unfavorable changes in estimates totaling approximately $135 million and $116 million, respectfully, primarily in our NCSA and MENA segments. Changes in estimates in our EARC and APAC segments were not material.

NCSA—Our segment results for the three and six months ended June 30, 2019 were negatively impacted by net unfavorable changes in cost estimates, recognized during the period, aggregating approximately $131 million and $155 million, respectively. The net unfavorable changes were due to cost increases on:

 

the Freeport LNG project taken as a whole - $38 million and $49 million for the three- and six-month periods ended June 30, 2019, respectively;

 

Calpine - $11 million for both the three- and six-month periods ended June 30, 2019, respectively;

 

Abkatun-A2, Line 1 and Line 10 and Xanab projects for Pemex - $33 million and $47 million for the three- and six-month periods ended June 30, 2019, respectively;

 

Downstream petrochemical projects - $11 million for the three months period ended June 30, 2019 and $7 million net favorable changes in the six months ended June 30, 2019;

 

Power projects - $39 million and $48 million for the three- and six-month periods ended June 30, 2019, respectively; and

 

various other projects.

See Note 5, Revenue Recognition, for further discussion of our Freeport LNG Trains 1 & 2 and Train 3 and Pemex Line 1 and Line 10 projects.

MENA—Our segment results for the three and six months ended June 30, 2019 were positively impacted by net favorable changes in estimates aggregating approximately $2 million and $35 million. The net favorable changes were primarily due to reductions in costs on various projects in the Middle East.

Three and six months ended June 30, 2018

Segment operating income for the three and six months ended June 30, 2018 was positively impacted by net favorable changes in estimates totaling approximately $84 million and $121 million, respectively, primarily in our MENA (approximately $39 million and $69 million, respectively) and APAC (approximately $46 million and $55 million, respectively) segments.