PROJECT CHANGES IN ESTIMATES

12 Months Ended

Dec. 31, 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 2019, 2018 and 2017 segment operating results. For discussion of significant changes in estimates resulting from changes in transaction prices, see Note 5, Revenue Recognition.

2019

Segment operating results in 2019 were impacted by unfavorable changes in cost estimates totaling approximately $700 million, primarily in our NCSA segment. Unfavorable changes in estimates in our EARC (primarily on the Tyra Redevelopment project) and APAC (primarily on the project for the Pan Malaysia field development) segments of approximately $45 million and $40 million, respectively, were partially offset by favorable changes in our MENA segment of approximately $74 million.

NCSA—Our segment results in 2019 were negatively impacted by net unfavorable changes in cost estimates aggregating approximately $689 million. The net unfavorable changes were due to cost increases on:

• the Cameron LNG project – $180 million;

• the Freeport LNG project, as a whole – $138 million;

• Power projects, including the Asheville project - $144 million;

• Downstream petrochemical projects – $44 million;

• the Calpine project - $28 million;

• the Abkatun-A2, Line 1 and Line 10 and Xanab projects for Pemex – $46 million;

• the Rota 3 pipeline project – $78 million; and

• various other projects.

See Note 5, Revenue Recognition, for further discussion of our Freeport LNG project, as a whole, and the Asheville power plant, Rota 3 pipeline and Pemex Line 1 and Line 10 projects.

2018

Segment operating income in 2018 was impacted by net favorable changes in estimates totaling approximately $29 million, primarily in our MENA and APAC segments, partially offset by our NCSA segment.

NCSA—Our segment results for the year ended December 31, 2018 were negatively impacted by net unfavorable changes in estimates aggregating approximately $190 million, primarily due to cost increases on our Cameron LNG and Calpine loss projects in the United States and the Abkatun-A2 platform project in Mexico (see Note 5, Revenue Recognition for discussion), partially offset by savings on various projects in the United States.

MENA—Our segment results in 2018 were positively impacted by net favorable changes in estimates aggregating approximately $163 million, primarily due to productivity improvements and cost savings on marine, fabrication and other activities related to three of our projects in the Middle East.

APAC—Our segment results in 2018 were positively impacted by net favorable changes in estimates aggregating approximately $56 million. The net favorable changes were due to reductions in costs to complete on offshore campaigns and several other active projects, primarily on two of our Australian projects, partially offset by cost increases and weather downtime on various projects.

2017

Segment operating income in 2017 was positively impacted by net favorable changes in estimates totaling approximately $165 million, primarily in our MENA (approximately $103 million) and APAC (approximately $62 million) segments.