Changes in Project-Related Estimates	6 Months Ended
Jun. 24, 2016
Changes in Project-Related Estimates
Changes in Project-Related Estimates	(2) Changes in Project-Related Estimates We have a fixed-price Transportation contract to design and construct roadway improvements on an expressway in the southwestern United States. The project is approximately two-thirds complete. During the first and second quarter of 2015, we experienced unforeseen and unexpected cost growth resulting in charges to operations of $11.0 million and $42.6 million, respectively. The cost growth was primarily caused by design changes for a water main relocation, the discovery of extremely hard and abrasive rock during construction, differing site conditions, unidentified and mismarked utilities, client requested changes, labor supply challenges in the construction market, lower than expected labor productivity, and severe adverse weather delays. On December 17, 2015, our client claimed we were in default of our obligations under the design-build contract and issued a notice of default that triggered a cure period under the contract. On February 9, 2016, within the cure period, CH2M and the client agreed on a contract amendment under which the client accepted our recovery schedule and withdrew the notice of default. In the three and six months ended June 24, 2016, we estimated further cost growth in the amount of $60.0 million as a result of client-caused delays, including limited daytime access to portions of the site. We also had severe weather including record rainfall and production shortfalls resulting from differing site conditions and engineering rework. These factors caused estimated costs to increase for subcontractor labor and expenses, construction material quantities and delivery acceleration. CH2M is seeking resolution of outstanding change orders and claims through a combination of appeal to the Dispute Resolution Board (“DRB”) under the contract and direct negotiations with the client. Change orders and claims totaling approximately $80.0 million have been submitted to the client and, though we have received favorable rulings from the DRB on much of this, we have not been able to come to a mutual resolution with the client. CH2M will continue to aggressively pursue its entitlements based on claims and change orders, including litigation if it cannot reach resolution with the client. Accordingly, we cannot currently estimate the timing or amounts of recoveries or costs that may be achieved or incurred through these resolution processes, and as such we have not included any recoveries from these change orders and claims in our current estimated costs to complete. We may incur additional costs and losses if our cost estimation processes identify new costs not previously included in our total estimated loss. These potential changes in estimates could be materially adverse to the Company’s results of operations, cash flow or liquidity. Within our Power EPC segment, we are involved in a fixed-price EPC project in Australia through a consolidated joint venture partnership with an Australian construction contractor to engineer, procure, construct and start-up a combined cycle power plant that will supply power to a large liquefied natural gas facility in Australia. As of June 24, 2016, the total contract value of the joint venture project was approximately $530.4 million, and the project was approximately 70% complete, with engineering and procurement effectively complete and construction and commissioning activities ongoing. Due to a variety of issues related to the joint venture scope of work, the joint venture experienced project losses in 2014, of which our portion of the loss was $140.0 million. In 2015, the joint venture reached agreement with the client to settle certain claims to recover costs and extend the amount of time allowed to complete interim delivery milestones for the project. At that time, the total estimated costs to complete the project were reviewed by the project team and increased to reflect the agreed upon schedule and deliverables of the job. These revisions to the expected project costs largely offset the cost recoveries received from the settlement, and as a result we did not make a change to the loss provision in 2015. During the second quarter of 2016, the client advised it was unable to meet various obligations in line with the program schedule as required under the terms of the contract. These delays, other client-driven factors, and related lower than expected construction labor productivity rates were the primary drivers that resulted in the joint venture recognizing a charge to operations of $190.5 million in the three and six months ended June 24, 2016. Our portion of the increased project costs was $95.3 million. To date, the joint venture has submitted change orders and claims to the client totaling more than $190.0 million for recoveries and the joint venture will continue to aggressively pursue recovery of costs and schedule relief. The amount of any recoveries is currently unknown and will be subject to negotiations or a formal dispute processes, and therefore the estimated cost growth does not assume any cost recovery assumptions. While management believes the current estimated costs to complete the project represent the best estimate at this time, there is a significant amount of work that still needs to be performed on the project before achieving substantial completion. Thus there can be no assurance that additional cost growth will not occur. Any additional changes in estimates could be materially adverse to the Company’s results of operations, cash flow or liquidity. All reserves for project related losses for these projects as well as other immaterial loss projects are included in other accrued liabilities and totaled $208.7 million and $152.6 million as of June 24, 2016 and December 25, 2015, respectively. Of the amounts included in the June 24, 2016 and December 25, 2015 balances, $66.2 million and $44.4 million, respectively, relate to accrued project losses attributable to, and payable by, a noncontrolling joint venture partner.

(2) Changes in Project-Related Estimates

We have a fixed-price Transportation contract to design and construct roadway improvements on an expressway in the southwestern United States. The project is approximately two-thirds complete. During the first and second quarter of 2015, we experienced unforeseen and unexpected cost growth resulting in charges to operations of $11.0 million and $42.6 million, respectively. The cost growth was primarily caused by design changes for a water main relocation, the discovery of extremely hard and abrasive rock during construction, differing site conditions, unidentified and mismarked utilities, client requested changes, labor supply challenges in the construction market, lower than expected labor productivity, and severe adverse weather delays.

On December 17, 2015, our client claimed we were in default of our obligations under the design-build contract and issued a notice of default that triggered a cure period under the contract. On February 9, 2016, within the cure period, CH2M and the client agreed on a contract amendment under which the client accepted our recovery schedule and withdrew the notice of default.

In the three and six months ended June 24, 2016, we estimated further cost growth in the amount of $60.0 million as a result of client-caused delays, including limited daytime access to portions of the site. We also had severe weather including record rainfall and production shortfalls resulting from differing site conditions and engineering rework. These factors caused estimated costs to increase for subcontractor labor and expenses, construction material quantities and delivery acceleration.

CH2M is seeking resolution of outstanding change orders and claims through a combination of appeal to the Dispute Resolution Board (“DRB”) under the contract and direct negotiations with the client. Change orders and claims totaling approximately $80.0 million have been submitted to the client and, though we have received favorable rulings from the DRB on much of this, we have not been able to come to a mutual resolution with the client. CH2M will continue to aggressively pursue its entitlements based on claims and change orders, including litigation if it cannot reach resolution with the client. Accordingly, we cannot currently estimate the timing or amounts of recoveries or costs that may be achieved or incurred through these resolution processes, and as such we have not included any recoveries from these change orders and claims in our current estimated costs to complete. We may incur additional costs and losses if our cost estimation processes identify new costs not previously included in our total estimated loss. These potential changes in estimates could be materially adverse to the Company’s results of operations, cash flow or liquidity.

Within our Power EPC segment, we are involved in a fixed-price EPC project in Australia through a consolidated joint venture partnership with an Australian construction contractor to engineer, procure, construct and start-up a combined cycle power plant that will supply power to a large liquefied natural gas facility in Australia. As of June 24, 2016, the total contract value of the joint venture project was approximately $530.4 million, and the project was approximately 70% complete, with engineering and procurement effectively complete and construction and commissioning activities ongoing. Due to a variety of issues related to the joint venture scope of work, the joint venture experienced project losses in 2014, of which our portion of the loss was $140.0 million. In 2015, the joint venture reached agreement with the client to settle certain claims to recover costs and extend the amount of time allowed to complete interim delivery milestones for the project. At that time, the total estimated costs to complete the project were reviewed by the project team and increased to reflect the agreed upon schedule and deliverables of the job. These revisions to the expected project costs largely offset the cost recoveries received from the settlement, and as a result we did not make a change to the loss provision in 2015.

During the second quarter of 2016, the client advised it was unable to meet various obligations in line with the program schedule as required under the terms of the contract. These delays, other client-driven factors, and related lower than expected construction labor productivity rates were the primary drivers that resulted in the joint venture recognizing a charge to operations of $190.5 million in the three and six months ended June 24, 2016. Our portion of the increased project costs was $95.3 million. To date, the joint venture has submitted change orders and claims to the client totaling more than $190.0 million for recoveries and the joint venture will continue to aggressively pursue recovery of costs and schedule relief. The amount of any recoveries is currently unknown and will be subject to negotiations or a formal dispute processes, and therefore the estimated cost growth does not assume any cost recovery assumptions. While management believes the current estimated costs to complete the project represent the best estimate at this time, there is a significant amount of work that still needs to be performed on the project before achieving substantial completion. Thus there can be no assurance that additional cost growth will not occur. Any additional changes in estimates could be materially adverse to the Company’s results of operations, cash flow or liquidity.

All reserves for project related losses for these projects as well as other immaterial loss projects are included in other accrued liabilities and totaled $208.7 million and $152.6 million as of June 24, 2016 and December 25, 2015, respectively. Of the amounts included in the June 24, 2016 and December 25, 2015 balances, $66.2 million and $44.4 million, respectively, relate to accrued project losses attributable to, and payable by, a noncontrolling joint venture partner.