Revisions in Estimates

Our profit recognition related to construction contracts is based on estimates of costs to complete each project. These estimates can vary in the normal course of business as projects progress and uncertainties are resolved. We do not recognize revenue on contract change orders or claims until we have a signed agreement; however, we do recognize costs as incurred and revisions to estimated total costs as soon as the obligation to perform is determined. Approved change orders and claims, as well as changes in related estimates of costs to complete, are considered revisions in estimates. We use the cumulative catch-up method applicable to construction contract accounting to account for revisions in estimates. Under this option, revisions in estimates are accounted for in their entirety in the period of change. As of September 30, 2012, we had no revisions in estimates that are reasonably certain to impact future periods.

Construction

Increases



		Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)		2012		2011		2012		2011
Number of projects with upward estimate changes		1		2		4		4
Range of increase in gross profit from each project, net	$	1.6	$	1.3 - 1.4	$	1.0 - 3.0	$	1.1 - 2.9
Increase on project profitability	$	1.6	$	2.7	$	7.1	$	7.0

The increases during the three and nine months ended September 30, 2012 were due to lower than anticipated costs and settlement of outstanding issues with contract owners. The increases during the three and nine months ended September 30, 2011 were primarily due to improved salvage prices for excess material, the settlement of outstanding cost issues and owner directed scope changes.

Decreases



		Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)		2012		2011		2012		2011
Number of projects with downward estimate changes		4		2		6		3
Range of reduction in gross profit from each project, net	$	1.1 - 3.9	$	1.4 - 2.6	$	1.1 - 6.3	$	1.4 - 2.6
Decrease on project profitability	$	7.6	$	4.0	$	16.5	$	5.4

The decreases during the three and nine months ended September 30, 2012 were due to lower productivity than originally anticipated. The decreases during the three and nine months ended September 30, 2011 were due to lower productivity than anticipated and unanticipated rework costs.

Large Project Construction

The net changes in project profitability from revisions in estimates, both increases and decreases, that individually had an impact of $1.0 million or more on gross profit were net increases of $35.9 million and $48.9 million for the three and nine months ended September 30, 2012, respectively. The net changes for the three and nine months ended September 30, 2011 were net increases of $2.7 million and $7.9 million, respectively. Amounts attributable to noncontrolling interests were $5.7 million and $6.6 million of the net increases for the three and nine months ended September 30, 2012, respectively, and were $1.0 million and $0.6 million of the net increases for the three and nine months ended September 30, 2011, respectively. The projects are summarized as follows:

Increases



		Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)		2012		2011		2012		2011
Number of projects with upward estimate changes		8		5		8		6
Range of increase in gross profit from each project, net	$	1.1 - 12.6	$	1.0 - 2.6	$	1.1 - 16.3	$	1.4 - 4.2
Increase on project profitability	$	35.9	$	8.8	$	54.7	$	17.7

The increases during the three and nine months ended September 30, 2012 were due to owner directed scope changes and lower than anticipated construction costs. The increases during the three and nine months ended September 30, 2011 were due to the settlement of outstanding issues with a contract owner, owner directed scope change, lower than anticipated construction costs and the resolution of a project claim.

Decreases



		Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)		2012		2011		2012		2011
Number of projects with downward estimate changes		—		3		2		2
Range of reduction in gross profit from each project, net	$	—	$	1.7 - 2.4	$	1.7 - 4.1	$	4.2 - 5.6
Decrease on project profitability	$	—	$	6.1	$	5.8	$	9.8

There were no downward estimate changes during the three months ended September 30, 2012. The downward estimate changes during the nine months ended September 30, 2012 were due to lower productivity than anticipated. The downward estimate changes during the three and nine months ended September 30, 2011 were due to increased costs to resolve project uncertainties and lower productivity than anticipated.