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 nine months ended September 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 revise our cost estimates in the future.

Construction

Increases



	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with upward estimate changes		1		1		2		7
Range of increase in gross profit from each project, net	$	2.6	$	5.1	$	1.8 - 2.7	$	1.0 - 5.0
Increase on project profitability	$	2.6	$	5.1	$	4.5	$	15.3

The increases during the three and nine months ended September 30, 2016 were due to lower costs and higher productivity than originally anticipated as well as settlements of outstanding issues with contract owners during the nine month period. The increases during the three and nine months ended September 30, 2015 were due to settlements of outstanding issues with contract owners and lower costs than anticipated as well as owner-directed scope changes and estimated cost recovery from claims, net of claim related costs during the nine months.

Decreases



	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with downward estimate changes		1		1		5		3
Range of reduction in gross profit from each project, net	$	1.9	$	1.4	$	1.1 - 2.6	$	1.5 - 2.3
Decrease on project profitability	$	1.9	$	1.4	$	7.6	$	5.9

The decreases during the three and nine months ended September 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 increases of $0.4 million and net decreases of $6.0 million for the three and nine months ended September 30, 2016, respectively. The changes for the three and nine months ended September 30, 2015 were net increases of $5.0 million and $1.8 million, respectively. There were no amounts attributable to non-controlling interests for the three months ended September 30, 2016 and the amounts attributable to non-controlling interests were $3.5 million of the net decreases for the nine months ended September 30, 2016 and were $1.4 million and $0.3 million of the net increases for the three and nine months ended September 30, 2015, respectively. The projects are summarized as follows:

Increases



	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with upward estimate changes		3		4		7		7
Range of increase in gross profit from each project, net	$	1.4 - 3.0	$	1.0 - 3.9	$	1.2 - 6.5	$	1.5 - 5.1
Increase on project profitability	$	6.1	$	9.4	$	19.8	$	19.9

The increases during the three and nine months ended September 30, 2016 were due to owner-directed scope changes, settlement of an outstanding back charge claim and higher productivity than originally anticipated as well as estimated recovery from back charge claims during the nine month period. The increases during the three and nine months ended September 30, 2015 were due to settlements of outstanding issues with contract owners and owner-directed scope changes, as well as estimated cost recovery of customer affirmative claims during the nine month period, net of claim related costs.

Decreases



	Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)		2016		2015		2016		2015
Number of projects with downward estimate changes		3		2		4		5
Range of reduction in gross profit from each project, net	$	1.1 - 3.5	$	1.8 - 2.6	$	3.4 - 7.9	$	2.6 - 4.6
Decrease on project profitability	$	5.7	$	4.4	$	25.8	$	18.1

The decreases during the three and nine months ended September 30, 2016 and 2015 were due to additional design, weather and owner-related costs, net of estimated recovery from back charge and customer affirmative claims as well as lower productivity and higher costs than originally anticipated.

The impact to gross profit from significant revisions in estimates related to estimated and actual claim and back charge recoveries as well as the associated estimated contract costs are included in the tables above.

Revisions in estimates for the three and nine months ended September 30, 2016 included increases in revenue of $1.2 million and $21.4 million, respectively, related to the estimated cost recovery of customer affirmative claims. Of these totals, $0.2 million and $15.5 million, were also affected by an increase in estimated contract costs that were in excess of the estimated recovery during the three and nine months ended September 30, 2016, respectively. For the remaining $1.0 million and $5.9 million, estimated contract costs in excess of estimated cost recovery were recorded in prior periods.

Revisions in estimates for the three and nine months ended September 30, 2015 included increases in revenue of $35.0 million and $44.7 million, respectively, related to the estimated cost recovery of customer affirmative claims. Of these totals, $33.1 million was also affected by an increase in estimated contract costs that were in excess of the estimated recovery during both the three and nine months ended September 30, 2015. For the remaining $1.9 million and $11.6 million, estimated contract costs in excess of estimated cost recovery were recorded in prior periods.

Revisions in estimates for the three and nine months ended September 30, 2016 included increases in gross profit of $3.3 million and $10.9 million, respectively, related to the estimated recovery of back charge claims. Of these totals, $1.2 million and $3.4 million were also affected by an increase in estimated contract costs that were in excess of the estimated recovery during the three and nine months ended September 30, 2016, respectively. For the remaining $2.1 million and $7.5 million, estimated contract costs in excess of estimated cost recovery were recorded in prior periods. There was no estimated recovery of back charge claims during the three and nine months ended September 30, 2015.