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 affirmative 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 affirmative 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. There can be no assurance that we will not experience further changes in circumstances or otherwise be required to further revise our profitability estimates.

For the majority of our contracts, revenue in an amount equal to cost incurred is recognized prior to contracts reaching at least 25% completion, thus deferring the related profit. Except in the case of construction management, time and material and cost-plus agreements, it is our judgment that until a project reaches at least 25% completion, there may be insufficient information to determine the estimated profit on the project with a reasonable level of certainty. The gross profit impact from projects that reached the profit recognition threshold is not included in the tables below. During the three months ended March 31, 2014 and 2013, the initial gross profit impact from projects exceeding the threshold was $4.0 million and $4.5 million, respectively.

Construction

There were two revisions in estimates that individually had an impact of $1.0 million or more on gross profit for the three months ended March 31, 2014. The impact to gross profit was a $3.5 million decrease due to additional costs and lower productivity than originally anticipated. There were no revisions in estimates, either increases or decreases, that individually had an impact of $1.0 million or more on gross profit during the three months ended March 31, 2013.

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 $8.2 million and $9.2 million for the three months ended March 31, 2014 and 2013, respectively. Amounts attributable to non-controlling interests were $0.7 million and $1.7 million for the three months ended March 31, 2014 and 2013, respectively. The projects are summarized as follows:

Increases



	Three Months Ended March 31,
(dollars in millions)			2014		2013
Number of projects with upward estimate changes			5		3
Range of increase in gross profit from each project, net		$	1.3 - 7.9	$	1.9 - 7.8
Increase on project profitability		$	16.1	$	16.1

The increases during the three months ended March 31, 2014 were due to settlement of outstanding issues with contract owners and a vendor, and owner-directed scope changes. The increases during the three months ended March 31, 2013 were due to lower than anticipated construction costs and resolution of project uncertainties.

Decreases



	Three Months Ended March 31,
(dollars in millions)			2014		2013
Number of projects with downward estimate changes			2		2
Range of reduction in gross profit from each project, net		$	3.4 - 4.5	$	2.4 - 4.5
Decrease on project profitability		$	7.9	$	6.9

The decreases during the three months ended March 31, 2014 were due to additional costs and lower productivity than originally anticipated. The decreases during the three months ended March 31, 2013 were due to higher than anticipated costs.