Note 10 - Construction Joint Ventures

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Construction Joint Ventures [Text Block]

10. Construction Joint Ventures

We participate in various construction joint ventures. As discussed in Note 1, we have determined that certain of these joint ventures are consolidated because they are VIEs and we are the primary beneficiary. We continually evaluate whether there are changes in the status of the VIEs or changes to the primary beneficiary designation of the VIE. Based on our assessments during the years ended December 31, 2019, 2018 and 2017, we determined no change was required for existing joint ventures.

Due to the joint and several nature of the performance obligations under the related owner contracts, if any of the partners fail to perform, we and the remaining partners, if any, would be responsible for performance of the outstanding work (i.e., we provide a performance guarantee). At December 31, 2019, there was $2.6 billion of construction revenue to be recognized on unconsolidated and line item construction joint venture contracts of which $0.9 billion represented our share and the remaining $1.7 billion represented our partners’ share. We are not able to estimate amounts that may be required beyond the remaining cost of the work to be performed. These costs could be offset by billings to the customer or by proceeds from our partners’ corporate and/or other guarantees. See Note 14 for disclosure of the performance guarantee amounts recorded in the consolidated balance sheets and Note 1 for additional discussion regarding performance guarantees.

Consolidated Construction Joint Ventures   

At  December 31, 2019, we were engaged in seven active CCJV projects with total contract values ranging from $0.7 million to $410.5 million and a combined total of $1.6 billion. Our share of revenue remaining to be recognized on these CCJVs was $521.6 million and ranged from $0.2 million to $210.5 million. Our proportionate share of the equity in these joint ventures was between 50% and 65%. During the years ended December 31, 2019, 2018 and 2017, total revenue from CCJVs was $261.2 million, $243.1 million and $190.3 million, respectively. During the year ended December 31, 2019, CCJVs used $13.1 million of operating cash flows and during the years ended  December 31, 2018 and 2017 CCJVs provided $85.6 million and $36.9 million of operating cash flows, respectively.

Unconsolidated Construction Joint Ventures

As discussed in Note 1, where we have determined we are not the primary beneficiary of a joint venture but do exercise significant influence, we account for our share of the operations of unconsolidated construction joint ventures on a pro rata basis in revenue and cost of revenue in the consolidated statements of operations and in equity in construction joint ventures in the consolidated balance sheets.

As of  December 31, 2019, we were engaged in nine active unconsolidated joint venture projects with total contract values ranging from $89.2 million to $3.8 billion and a combined total of $11.5 billion of which our share was $3.4 billion. Our proportionate share of the equity in these unconsolidated joint ventures ranged from 20% to 50%. As of December 31, 2019, our share of the revenue remaining to be recognized on these unconsolidated construction joint ventures was $749.4 million and ranged from $1.3 million to $207.5 million.

The following is summary financial information related to unconsolidated construction joint ventures (in thousands):

			As Restated
December 31,	2019		2018
Assets
Cash, cash equivalents and marketable securities	$	179,049	$	229,562
Other current assets (1)		972,840		814,586
Noncurrent assets		207,584		204,090
Less partners’ interest		904,565		822,215
Granite’s interest (1), (2)		454,908		426,023
Liabilities
Current liabilities		581,199		525,036
Less partners’ interest and adjustments (3)		243,202		267,056
Granite’s interest		337,997		257,980
Equity in construction joint ventures (4)	$	116,911	$	168,043

(1) Included in this balance and in accrued and other current liabilities on our consolidated balance sheets as of December 31, 2019 and 2018 was $81.9 million and $88.2 million, respectively, related to performance guarantees (see Note 14).

(2) Included in this balance as of December 31, 2019 and 2018 was $116.8 million and $92.4 million, respectively, related to Granite’s share of estimated cost recovery of customer affirmative claims. In addition, this balance included $15.9 million and $17.9 million related to Granite’s share of estimated recovery of back charge claims as of December 31, 2019 and 2018, respectively.

(3) Partners’ interest and adjustments includes amounts to reconcile total net assets as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

(4) Included in this balance and in accrued expenses and other current liabilities on the consolidated balance sheets were amounts related to deficits in unconsolidated construction joint ventures which includes provisions for losses that were $76.2 million and $63.3 million as of December 31, 2019 and 2018, respectively.

				As Restated
Years Ended December 31,		2019			2018			2017
Revenue
Total	$	1,471,157		$	1,544,406		$	2,057,336
Less partners’ interest and adjustments (1)		1,049,797			1,029,931			1,496,429
Granite’s interest		421,360			514,475			560,907
Cost of revenue
Total		1,900,524			1,787,501			1,995,915
Less partners’ interest and adjustments (1)		1,357,852			1,225,905			1,390,023
Granite’s interest		542,672			561,596			605,892
Granite’s interest in gross loss	$	(121,312	)	$	(47,121	)	$	(44,985	)

(1) Partners’ interest and adjustments includes amounts to reconcile total revenue and total cost of revenue as reported by our partners to Granite’s interest adjusted to reflect our accounting policies and estimates primarily related to contract forecast differences.

During the years ended December 31, 2019, 2018 and 2017, unconsolidated construction joint venture net (loss) income was $(422.5) million, $(240.3) million and $62.2 million, respectively, of which our share were net losses of $(120.6) million, $(44.6) million and $(45.9) million, respectively. The differences between our share of the joint venture net loss during the years ended December 31, 2019, 2018 and 2017 when compared to the joint venture net (loss) income primarily resulted from differences between our estimated total revenue and cost of revenue when compared to that of our partners’ on a range of three to five projects in each year. The differences are due to timing differences from varying accounting policies and in public company quarterly reporting requirements. These joint venture net income amounts exclude our corporate overhead required to manage the joint ventures and include taxes only to the extent the applicable states have joint venture level taxes.

Line Item Joint Ventures

As of  December 31, 2019, we had five active line item joint venture construction projects with a total contract value of $366.0 million of which our portion was $207.0 million. As of  December 31, 2019, our share of revenue remaining to be recognized on these line item joint ventures was $166.0 million. During the years ended December 31, 2019, 2018 and 2017, our portion of revenue from line item joint ventures was $40.0 million, $4.9 million and $22.9 million, respectively.