7.	Contract Receivables, net

Contract receivables, net are summarized in the following table.

	Balance at July 31,
	2016			2015
	(in thousands)
Contract Receivables:
Billed	$	19,552		$	22,916
Unbilled		20,696			25,904
		40,248			48,820
Allowance for doubtful accounts and contract adjustments		(5,929	)		(5,954	)
Contract receivables, net	$	34,319		$	42,866

Billed contract receivables included contractual retainage balances of $0.9 million and $0.5 million at July 31, 2016 and 2015, respectively. Management anticipates that unbilled contract receivables and retainage balances at July 31, 2016 will be substantially billed and collected within one year.

Contract Receivable Concentrations

Significant concentrations of contract receivables and the allowance for doubtful accounts and contract adjustments are summarized in the following table.

	Balance at July 31, 2016				Balance at July 31, 2015
Region	Contract Receivables		Allowance for Doubtful Accounts and Contract Adjustments		Contract Receivables		Allowance for Doubtful Accounts and Contract Adjustments
	(in thousands)

United States, Canada and South America	$	35,266	$	1,034	$	43,629	$	1,043
Middle East and Africa		4,921		4,895		5,067		4,894
Asia		61		---		124		17
Totals	$	40,248	$	5,929	$	48,820	$	5,954

Contract adjustments related to projects in the United States, Canada and South America typically result from cost overruns related to current or recently completed projects, or from recoveries of cost overruns recorded as contract adjustments in prior reporting periods. Contract adjustments related to projects in the Middle East, Africa and Asia typically result from difficulties encountered while attempting to settle and close-out claims that may be several years old.

Combined contract receivables related to projects in the Middle East, Africa and Asia represented 12% and 11% of total contract receivables at July 31, 2016 and 2015, respectively, while the combined allowance for doubtful accounts and contract adjustments related to these projects represented 83% and 82%, respectively, of the total allowance for doubtful accounts and contract adjustments at those same period end dates. These allowance percentages highlight the Company’s experience of heightened operating risks (i.e., political, regulatory and cultural risks) within these foreign regions in comparison with similar risks in the United States, Canada and South America. These heightened operating risks have resulted in increased collection risks and the Company expending resources that it may not recover for several months, or at all.

Allowance for Doubtful Accounts and Contract Adjustments

Activity within the allowance for doubtful accounts and contract adjustments is summarized in the following table.

	Fiscal Year Ended July 31,
	2016			2015			2014
	(in thousands)

Balance at beginning of period	$	5,954		$	6,508		$	5,969
Net increase (decrease) due to adjustments in the allowance for:
Contract adjustments (1)		(577	)		(263	)		474
Doubtful accounts (2)		552			(291	)		95
Transfer of reserves (to) from allowance for project disallowances (3)		---			---			(30	)
Balance at end of period	$	5,929		$	5,954		$	6,508

(1)

Increases (decreases) to the allowance for contract adjustments on the consolidated balance sheets are recorded as (decreases) increases to revenue on the consolidated statements of operations.

(2)

Increases (decreases) to the allowance for doubtful accounts on the consolidated balance sheets are recorded as increases (decreases) to administrative and other indirect operating expenses on the consolidated statements of operations.

(3)

The allowance for project disallowances is included in other accrued liabilities on the consolidated balance sheets. Refer to Note 13 of these consolidated financial statements.

During fiscal year 2016, the Company’s Brazilian operations continued to be adversely affected by an economic downturn, the total scope and duration of which are uncertain. Management is monitoring any adverse trends or events that may impact the realizability of the recorded net book value of contract receivables from customers in Brazil. The Company maintained $0.8 million and $0.4 million of allowance for doubtful accounts at July 31, 2016 and 2015, respectively, related to the Company’s Brazilian operations.