Contracts

12 Months Ended

Dec. 28, 2019

Contractors [Abstract]

Contracts

NOTE 6 - CONTRACTS

Costs, estimated earnings, and billings on uncompleted contracts consist of the following at December 28, 2019 and December 29, 2018 (amounts in thousands):

	2019			2018
Costs incurred on uncompleted contracts	$	23,846		$	34,800
Estimated earnings on uncompleted contracts		5,188			6,921
Earned revenues		29,034			41,721
Less: billings to date		30,610			39,150
Net costs in excess of billings on uncompleted contracts	$	(1,576	)	$	2,571
Costs and estimated earnings in excess of billings on uncompleted contracts	$	3,862		$	3,175
Billings in excess of costs and estimated earnings on uncompleted contracts		(5,438	)		(604	)
Net costs in excess of billings on uncompleted contracts	$	(1,576	)	$	2,571

Revenue on fixed-price contracts is recorded primarily using the percentage-of-completion (cost-to-cost) method. Revenue and gross margin on fixed-price contracts are subject to revision throughout the lives of the contracts and any required adjustments are made in the period in which the revisions become known. To manage unknown risks, management may use contingency amounts to increase the estimated costs, therefore, lowering the earned revenues until the risks are better identified and quantified or have been mitigated. We had $0.9 million in contingency amounts as of December 28, 2019 and had $1.0 million in contingency amounts as of December 29, 2018. Losses on contracts are recorded in full as they are identified.

We recognize service revenue as soon as the services are performed. For clients that we consider higher risk, due to past payment history or history of not providing written work authorizations, we have deferred revenue recognition until we receive either a written authorization or a payment. We had $0.2 million in deferred revenue for each of the years ended December 28, 2019 and December 29, 2018. This deferred revenue represents work on not to exceed contracts that has been performed but has not been billed or been recorded as revenue due to our revenue recognition policies as the work was performed outside the contracted amount without obtaining proper work order changes. It is uncertain as to whether these revenues will eventually be recognized by us or the proceeds collected. The costs associated with these billings have been expensed as incurred.