(3) Revenue

Revenue Recognition

The Company derives revenue from long-term construction contracts with public and private customers primarily in the United States and its territories and in certain other international locations. The Company’s construction contracts are generally each accounted for as a single unit of account (i.e., as a single performance obligation).

Throughout the execution of construction contracts, the Company and its affiliated entities recognize revenue with the continuous transfer of control to the customer. The customer typically controls the asset under construction by either contractual termination clauses or by the Company’s rights to payment for work already performed on the asset under construction that does not have an alternative use for the Company.

Because control transfers over time, revenue is recognized to the extent of progress towards completion of the performance obligations. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services provided. The Company generally uses the cost-to-cost method for its contracts, which measures progress towards completion for each performance obligation based on the ratio of costs incurred to date to the total estimated costs at completion for the respective performance obligation. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Revenue, including estimated fees or profits, is recorded proportionately as costs are incurred. Cost of operations includes labor, materials, subcontractor costs, and other direct and indirect costs, including depreciation and amortization.

Due to the nature of the work required to be performed on many of the Company’s performance obligations, estimating total revenue and cost at completion is complex, subject to many variables and requires significant judgment. The estimates used during the contract performance period require judgment and making assumptions as to the occurrence of future events and the likelihood of variable consideration, including the impact of change orders, claims, contract disputes and the achievement of contractual performance criteria, and award or other incentive fees. The Company estimates variable consideration at the most likely amount it expects to receive. The Company includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of anticipated performance and all information (historical, current and forecasted) that is reasonably available to management.

Disaggregation of Revenue

The following tables disaggregate revenue by end market, customer type and contract type, which the Company believes best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.



	Three Months		Six Months
	Ended June 30,		Ended June 30,
(in thousands)	2018		2018
Civil segment revenue by end market:
Mass transit	$	158,096	$	308,222
Bridges		120,929		183,739
Highways		65,809		83,066
Tunneling		23,931		32,632
Other		33,708		57,928
Total Civil segment revenue	$	402,473	$	665,587



	Three Months		Six Months
	Ended June 30,		Ended June 30,
(in thousands)	2018		2018
Building segment revenue by end market:
Health care facilities	$	118,116	$	193,197
Office		39,237		186,559
Hospitality and gaming		79,490		161,255
Municipal and government		70,528		120,981
Mixed use		38,814		80,590
Education facilities		32,876		65,358
Industrial and commercial		20,081		46,507
Other		47,837		82,773
Total Building segment revenue	$	446,979	$	937,220



	Three Months		Six Months
	Ended June 30,		Ended June 30,
(in thousands)	2018		2018
Specialty Contractors segment revenue by end market:
Mass transit	$	78,169	$	153,351
Mixed use		51,976		99,833
Industrial and commercial		36,540		75,878
Transportation		22,019		56,004
Education facilities		26,298		51,602
Condominiums		22,761		45,850
Health care facilities		14,623		30,988
Other		18,247		31,928
Total Specialty Contractors segment revenue	$	270,633	$	545,434



	Three Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by customer type:
State and local agencies	$	327,195	$	159,556	$	106,308	$	593,059
Federal agencies		30,772		52,263		14,988		98,023
Private owners		44,506		235,160		149,337		429,003
Total revenue	$	402,473	$	446,979	$	270,633	$	1,120,085



	Six Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by customer type:
State and local agencies	$	553,546	$	275,541	$	212,628	$	1,041,715
Federal agencies		40,627		96,574		33,712		170,913
Private owners		71,414		565,105		299,094		935,613
Total revenue	$	665,587	$	937,220	$	545,434	$	2,148,241

State and local agencies. The Company’s state and local government customers include state transportation departments, metropolitan authorities, cities, municipal agencies, school districts and public universities. Services provided to state and local customers are primarily pursuant to contracts awarded through competitive bidding processes. Construction services for state and local government customers have included mass-transit systems, bridges, highways, judicial and correctional facilities, schools and dormitories, health care facilities, convention centers, parking structures and other municipal buildings. The vast majority of the Company’s civil contracting and building construction services are provided in locations throughout the United States and its territories.

Federal agencies. The Company’s federal government customers include the U.S. State Department, the U.S. Navy, the U.S. Army Corps of Engineers, the U.S. Air Force and the National Park Service. Services provided to federal agencies are typically pursuant to competitively bid contracts for specific or multi-year assignments that involve new construction or infrastructure repairs or improvements. A portion of revenue from federal agencies is derived from projects in overseas locations.

Private owners. The Company’s private customers include real estate developers, health care companies, technology companies, hospitality and gaming resort owners, Native American sovereign nations, public corporations and private universities. Services are provided to private customers through negotiated contract arrangements, as well as through competitive bids.

Most federal, state and local government contracts contain provisions that permit the termination of contracts, in whole or in part, for the convenience of the government, among other reasons.



	Three Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by contract type:
Fixed price	$	259,927	$	96,657	$	234,495	$	591,079
Guaranteed maximum price		3,103		270,440		17,462		291,005
Unit price		121,447		10,771		7,233		139,451
Cost plus fee and other		17,996		69,111		11,443		98,550
Total revenue	$	402,473	$	446,979	$	270,633	$	1,120,085



	Six Months Ended June 30, 2018
					Specialty
(in thousands)	Civil		Building		Contractors		Total
Revenue by contract type:
Fixed price	$	443,830	$	175,658	$	481,919	$	1,101,407
Guaranteed maximum price		8,175		532,468		33,042		573,685
Unit price		190,201		19,588		13,890		223,679
Cost plus fee and other		23,381		209,506		16,583		249,470
Total revenue	$	665,587	$	937,220	$	545,434	$	2,148,241

Fixed price. Fixed price or lump sum contracts are most commonly used for projects in the Civil and Specialty Contractors segments and generally commit the Company to provide all of the resources required to complete a project for a fixed sum. Usually, fixed price contracts transfer more risk to the Company, but offer the opportunity for greater profits. Billings on fixed price contracts are typically based on estimated progress against predetermined contractual milestones.

Guaranteed maximum price (“GMP”). GMP contracts provide for a cost plus fee arrangement up to a maximum agreed upon price. These contracts place risks on the Company for amounts in excess of the GMP, but may permit an opportunity for greater profits than under cost plus fee contracts through sharing agreements with the owner on any cost savings that may be realized. Services provided by our Building segment to various private customers are often performed under GMP contracts. Billings on GMP contracts typically occur on a monthly basis and are based on actual costs incurred plus a negotiated margin.

Unit price. Unit price contracts are most prevalent for projects in the Civil and Specialty Contractors segments and generally commit the Company to provide an estimated or undetermined number of units or components that comprise a project at a fixed price per unit. This approach shifts the risk of estimating the quantity of units required to the project owner, but the risk of increased cost per unit is borne by the Company, unless otherwise allowed for in the contract. Billings on unit price contracts typically occur on a monthly basis and are based on actual quantity of work performed or completed during the billing period.

Cost plus fee. Cost plus fee contracts are used for many projects in the Building and Specialty Contractors segments. Cost plus fee contracts include cost plus fixed fee contracts and cost plus award fee contracts. Cost plus fixed fee contracts provide for reimbursement of approved project costs plus a fixed fee. Cost plus award fee contracts provide for reimbursement of the project costs plus a base fee, as well as an incentive fee based on cost and/or schedule performance. Cost plus fee contracts serve to minimize the Company’s financial risk, but may also limit profits. Billings on cost plus fee contracts typically occur on a monthly basis based on actual costs incurred plus a negotiated margin.

Changes in Contract Estimates that Impact Revenue

Changes to the total estimated contract revenue or cost, either due to unexpected events or revisions to management’s initial estimates, for a given project are recognized in the period in which they are determined. Net revenue recognized during the three and six months ended June 30, 2018 related to performance obligations satisfied (or partially satisfied) in prior periods was immaterial.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of June 30, 2018, the aggregate amounts of the transaction prices allocated to the remaining performance obligations of the Company’s construction contracts are $4.3 billion, $2.0 billion and $1.6 billion, for the Civil, Building and Specialty Contractors segments, respectively. The Company typically recognizes revenue on Civil segment projects over a period of three to five years, whereas for projects in the Building and Specialty Contractors segments, the Company typically recognizes revenue over a period of one to three years.