CONTRACT COSTS |
9 Months Ended |
|---|---|
Sep. 30, 2011 | |
| CONTRACT COSTS |
NOTE 5 – CONTRACT COSTS We define material, freight, equipment rental and sub-contractor services included in the direct costs of revenue associated with projects as pass-through costs. Since we use the percentage-of-completion accounting method to recognize revenue on construction contracts, by using a direct labor efforts expended method, pass-through costs have little or no impact in the determination of gross margin for a particular period. Pass-through costs included in revenue were 46.9% and 29.2% for the three-month periods ended September 30, 2011 and 2010, respectively. Pass through costs included in revenue were 46.6% and 37.2% for the nine-month periods ended September 30, 2011 and 2010, respectively. At September 30, 2011, we recorded revenue totaling $1.7 million related to certain change orders on two projects which have been approved as to scope but not price. We expect to resolve these change orders in the fourth quarter of 2011. At September 30, 2010, we had no unapproved change orders recorded in revenue. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. We recognized contract losses of $1.8 million and $498,000 in the three months ended September 30, 2011 and 2010, respectively. We recognized contract losses of $2.4 million and $1.3 million in the nine months ended September 30, 2011 and 2010, respectively. |