Revisions in Estimates

Our profit recognition related to construction contracts is based on estimates of costs to complete each project. These estimates can vary significantly in the normal course of business as projects progress, circumstances develop and evolve, 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 method, revisions in estimates are accounted for in their entirety in the period of change. As of September 30, 2013, we had no revisions in estimates that are reasonably certain to impact future periods. However, there can be no assurance that we will not experience further change in circumstances or otherwise be required to further revise our profitability estimates.

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 $1.5 million and $0.6 million for the three and nine months ended September 30, 2013. The net changes for the three and nine months ended September 30, 2012 were net decreases of $6.0 million and $9.4 million, respectively. The projects are summarized as follows:

Increases



	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)			2013		2012		2013		2012
Number of projects with upward estimate changes			4		1		5		4
Range of increase in gross profit from each project, net		$	1.3 - 2.7	$	1.6	$	1.1 - 3.0	$	1.0 - 3.0
Increase to project profitability		$	7.4	$	1.6	$	11.8	$	7.1

The increases during the three and nine months ended September 30, 2013 were due to owner directed scope changes and production at a higher rate than anticipated. 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.

Decreases



	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)			2013		2012		2013		2012
Number of projects with downward estimate changes			3		4		4		6
Range of reduction in gross profit from each project, net		$	1.5 - 2.5	$	1.1 - 3.9	$	1.1 - 4.3	$	1.1 - 6.3
Decrease to project profitability		$	5.9	$	7.6	$	11.2	$	16.5

The decreases during the three and nine months ended September 30, 2013 and 2012 were due to lower productivity than originally anticipated.

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 was a net decrease of $6.8 million for the three months ended September 30, 2013 and a net increase of $13.6 million for the nine months ended September 30, 2013, respectively. The net changes for the three and nine months ended September 30, 2012 were net increases of $35.9 million and $48.9 million, respectively. Amounts attributable to noncontrolling interests were $5.9 million of the net decrease for the three months ended September 30, 2013 and $4.3 million of the net increase for the nine months ended September 30, 2013. 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. The projects are summarized as follows:

Increases



	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)			2013		2012		2013		2012
Number of projects with upward estimate changes			3		8		6		8
Range of increase in gross profit from each project, net		$	1.0 - 10.5	$	1.1 - 12.6	$	2.1 - 26.6	$	1.1 - 16.3
Increase to project profitability		$	12.9	$	35.9	$	47.5	$	54.7

The increases during the three and nine months ended September 30, 2013 were due to production at a higher rate than anticipated and owner directed scope changes. 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.

Decreases



	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)			2013		2012		2013		2012
Number of projects with downward estimate changes			4		—		4		2
Range of reduction in gross profit from each project, net		$	1.4 - 14.7	$	—	$	1.6 - 23.5	$	1.7 - 4.1
Decrease to project profitability		$	19.7	$	—	$	33.9	$	5.8

The downward estimate changes during the three and nine months ended September 30, 2013 were primarily related to significant increased costs on a highway project in Washington State. This project has been impacted by lower productivity resulting from previously unforeseen design issues, schedule delays, associated job re-sequencing, and costs related to changes in the project scope. Compensation is being sought from both the client and subcontractors for a portion of the additional costs; however, the amount, sources and timing for any future compensation has yet to be finalized. The downward estimate changes during the nine months ended September 30, 2012 were due to lower productivity than anticipated, including with respect to the Washington State project discussed above.