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. When we experience significant changes in our estimates of costs to complete, we undergo a process that includes reviewing the nature of the changes to ensure that there are no material amounts that should have been recorded in a prior period rather than as revisions in estimates for the current period. In our review of these changes for the three and six months ended June 30, 2016 and 2015, we did not identify any material amounts that should have been recorded in a prior period. 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 cost estimates.

Revenue in an amount equal to cost incurred is recognized if there is not sufficient information to determine the estimated profit on the project with a reasonable level of certainty.

Revisions in estimates for the three and six months ended June 30, 2016 included an increase in revenue and gross profit of $17.4 million and $20.2 million, respectively, related to the estimated recovery of customer affirmative claims. Revenue and gross profit was also affected by an increase in estimated contract costs that were in excess of the estimated recovery for $15.3 million of the total during both the three and six month periods ended June 30, 2016. There were no material changes to estimated contract costs on the remaining $2.1 million and $4.9 million for the three and six months ended June 30, 2016, respectively.

Revisions in estimates during the six months ended June 30, 2015 included an increase in revenue and gross profit of $9.7 million related to the estimated recovery of customer affirmative claims for which there was no material associated cost during the respective periods. There was no revenue or gross profit associated with customer affirmative claims during the three months ended June 30, 2015.

Revisions in estimates for both the three and six months ended June 30, 2016 included an increase in gross profit of $7.6 million related to the estimated recovery of back charge claims. There was no estimated recovery of back charge claims during the three and six months ended June 30, 2015.

Construction

The 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 decreases of $1.0 million and $2.5 million for the three and six months ended June 30, 2016, respectively. There were no increases in project profitability from revisions in estimates that individually had an impact of $1.0 million or more on gross profit for the three and six months ended June 30, 2016. The net changes for the three and six months ended June 30, 2015, were net decreases of $1.3 million and net increases of $4.3 million, respectively. The projects are summarized as follows:

Increases



	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with upward estimate changes		—		1		—		4
Range of increase in gross profit from each project, net	$	—	$	1.3	$	—	$	1.0 - 2.3
Increase on project profitability	$	—	$	1.3	$	—	$	6.9

The increases during the three and six months ended June 30, 2015 were due to owner-directed scope changes and estimated cost recovery from claims.

Decreases



	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with downward estimate changes		1		2		2		2
Range of reduction in gross profit from each project, net	$	1.0	$	1.1 - 1.5	$	1.2 - 1.3	$	1.2 - 1.4
Decrease on project profitability	$	1.0	$	2.6	$	2.5	$	2.6

The decreases during the three and six months ended June 30, 2016 and 2015 were due to additional costs and lower productivity than originally anticipated.

Large Project Construction

The 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 decreases of $4.8 million and $7.8 million for the three and six months ended June 30, 2016, respectively. The net changes for the three and six months ended June 30, 2015 were net decreases of $1.1 million and $2.5 million, respectively. Amounts attributable to non-controlling interests were $3.6 million of the net decreases for both the three and six months ended June 30, 2016, respectively, and were $0.5 million and $1.0 million of the net decreases for the three and six months ended June 30, 2015, respectively. The projects are summarized as follows:

Increases



	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with upward estimate changes		2		2		4		3
Range of increase in gross profit from each project, net	$	2.9 - 6.9	$	2.3 - 2.3	$	1.2 - 6.9	$	2.1 - 2.9
Increase on project profitability	$	9.8	$	4.6	$	12.3	$	7.3

The increases during the three and six months ended June 30, 2016 were due to estimated recovery from back charge claims and higher productivity than originally anticipated as well as owner-directed scope changes during the six month period. The increases during the three and six months ended June 30, 2015 were due to owner-directed scope changes as well as estimated cost recovery from claims during the six month period.

Decreases



	Three Months Ended June 30,					Six Months Ended June 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with downward estimate changes		4		3		4		4
Range of reduction in gross profit from each project, net	$	2.2 - 5.9	$	1.2 - 2.4	$	3.4 - 6.4	$	1.4 - 3.4
Decrease on project profitability	$	14.6	$	5.7	$	20.1	$	9.8

The decreases during the three and six months ended June 30, 2016 and 2015 were due to additional design, weather and owner-related costs and lower productivity than originally anticipated.