Construction Contracts

6 Months Ended

Jun. 30, 2019

Construction contract costs and estimated earnings in excess of billings represent reimbursable costs and amounts earned under contracts in progress as of the balance sheet date. Such amounts become billable according to contract terms, which usually consider the passage of time, achievement of certain milestones, or completion of the project. The Company expects to bill and collect substantially all construction contract costs and estimated earnings in excess of billings as of June 30, 2019 during the next twelve months.

Billings in excess of construction contract costs and estimated earnings represent billings or collections on contracts made in advance of revenue recognized.

The following table summarizes the changes to the balances in the Company’s construction contract costs and estimated earnings in excess of billings account and the billings in excess of construction contract costs and estimated earnings account for the six months ended June 30, 2019 and 2018 (in thousands):



	Six Months Ended June 30, 2019						Six Months Ended June 30, 2018
	Construction contract costs and estimated earnings in excess of billings			Billings in excess of construction contract costs and estimated earnings			Construction contract costs and estimated earnings in excess of billings			Billings in excess of construction contract costs and estimated earnings
Beginning balance	$	1,358		$	3,037		$	245		$	3,591
Revenue recognized that was included in the balance at the beginning of the period	—			(3,037		)	—			(3,591		)
Increases due to new billings, excluding amounts recognized as revenue during the period	—			2,541			—			1,898
Transferred to receivables	(1,890		)	—			(245		)	—
Construction contract costs and estimated earnings not billed during the period	461			—			1,287			—
Changes due to cumulative catch-up adjustment arising from changes in the estimate of the stage of completion	532			(752		)	—			(187		)
Ending balance	$	461		$	1,789		$	1,287		$	1,711

The Company defers pre-contract costs when such costs are directly associated with specific anticipated contracts and their recovery is probable. Pre-contract costs of $0.7 million and $1.4 million were deferred as of June 30, 2019 and December 31, 2018, respectively. Amortization of pre-contract costs for the six months ended June 30, 2019 and 2018 was $0.3 million and zero, respectively.

Construction receivables and payables include retentions, amounts that are generally withheld until the completion of the contract or the satisfaction of certain restrictive conditions such as fulfillment guarantees. As of June 30, 2019 and December 31, 2018, construction receivables included retentions of $3.2 million and $8.5 million, respectively. The Company expects to collect substantially all construction receivables as of June 30, 2019 during the next twelve months. As of June 30, 2019 and December 31, 2018, construction payables included retentions of $14.7 million and $21.6 million, respectively. The Company expects to pay substantially all construction payables as of June 30, 2019 during the next twelve months.

The Company’s net position on uncompleted construction contracts comprised the following as of June 30, 2019 and December 31, 2018 (in thousands):



	June 30, 2019			December 31, 2018
Costs incurred on uncompleted construction contracts	$	630,425		$	594,006
Estimated earnings	22,383			20,375
Billings	(654,136		)	(616,060		)
Net position	$	(1,328	)	$	(1,679	)

Construction contract costs and estimated earnings in excess of billings	$	461		$	1,358
Billings in excess of construction contract costs and estimated earnings	(1,789		)	(3,037		)
Net position	$	(1,328	)	$	(1,679	)

The Company’s balances and changes in construction contract price allocated to unsatisfied performance obligations (backlog) as of June 30, 2019 and 2018 were as follows (in thousands):



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Beginning backlog	$	160,871		$	30,733		$	165,863		$	49,167
New contracts/change orders	39,177			27,807			51,196			32,376
Work performed	(21,416		)	(20,619		)	(38,427		)	(43,622		)
Ending backlog	$	178,632		$	37,921		$	178,632		$	37,921

The Company expects to complete a majority of the uncompleted contracts as of June 30, 2019 during the next 12 to 18 months.