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CONTRACT COSTS
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6 Months Ended |
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Jun. 30, 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 as a percentage of revenue were 42.1% and 50.4% for the three-month periods ended June 30, 2012 and 2011, respectively. Pass-through costs as a percentage of revenue were 39.1% and 46.4% for the six-month periods ended June 30, 2012 and 2011, respectively. At June 30, 2012, we recorded revenue totaling $2.1 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 third quarter of 2012. At June 30, 2011, we recorded revenue totaling $784,000 related to certain change orders on two projects which were approved as to scope but not price.
Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. We recognized contract losses of $673,000 and $688,000 in the three-month periods ended June 30, 2012 and 2011, respectively. We recognized contract losses of $762,000 and $1.1 million in the six-month periods ended June 30, 2012 and 2011, respectively. |