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CONTRACT COSTS
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3 Months Ended |
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Mar. 31, 2012
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| CONTRACT COSTS |
NOTE 4 – 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 pay period. Pass-through costs included in revenue were 35.4% and 39.0% for the three-month periods ended March 31, 2012 and 2011, respectively. At March 31, 2012, we recorded revenue totaling $588,000 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 second and third quarters of 2012. At March 31, 2011, 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 $89,000 and $602,000 in the three months ended March 31, 2012 and 2011, respectively. |