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Opening Request for Qualifications - SB Pinhook WTP Guaranteed Savings Contract - Reynolds Construction
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Opening Request for Qualifications - SB Pinhook WTP Guaranteed Savings Contract - Reynolds Construction
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10/14/2020 1:08:04 PM
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10/14/2020 1:07:51 PM
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Board of Public Works
Document Type
Contracts
Document Date
10/13/2020
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Reynolds Construction, LLC <br />Notes to Financial Statements <br />December 31, 2019 and 2018 <br />Performance Obligations <br />The Company recognizes revenue from construction contracts over time, as performance <br />obligations are satisfied, due to the continuous transfer of control to the customer. Construction <br />contracts are generally accounted for as a single unit of account (a single performance obligation) <br />and are not segmented between types of services. The Company measures transfer of control <br />utilizing an input method to measure progress based on contract cost incurred to date compared to <br />total estimated contract cost (cost-to-cost method). The cost-to-cost method is the most faithful <br />depiction of the Company’s performance because it directly measures the value of the services <br />transferred to the customer. Cost of revenue includes an allocation of depreciation and <br />amortization. The Company recognizes revenue, but not profit, on certain uninstalled materials <br />that are not specifically produced, fabricated or constructed for a project. Revenue on these <br />uninstalled materials is recognized when the cost is incurred (when control is transferred). <br />Changes to total estimated contract cost or losses, if any, are recognized in the period in which they <br />are determined as assessed at the contract level. Pre-contract costs are expensed as incurred unless <br />they are expected to be recovered from the customer. Project mobilization costs are generally <br />charged to project costs as incurred when they are an integrated part of the performance obligation <br />being transferred to the customer. <br />Variable Consideration <br />The nature of the Company’s contracts gives rise to several types of variable consideration, <br />including claims and unpriced change orders; awards and incentives; and liquidated damages and <br />penalties. The Company recognizes revenue for variable consideration when it is probable that a <br />significant reversal in the amount of cumulative revenue recognized will not occur. The Company <br />estimates the amount of revenue to be recognized on variable consideration using the expected <br />value, i.e., the sum of a probability-weighted amount or the most likely amount method, whichever <br />is expected to better predict the amount. Factors considered in determining whether revenue <br />associated with claims including, change orders in dispute and unapproved change orders in regard <br />to both scope and price should be recognized include the following: <br />The contract or other evidence provides a legal basis for the claim <br />Additional costs were caused by circumstances that were unforeseen at the contract date <br />and not the result of deficiencies in the company’s performance <br />Claim-related costs are identifiable and considered reasonable in view of the work <br />performed <br />Evidence supporting the claim is objective and verifiable <br />If the requirements for recognizing revenue for claims or unapproved change orders are met, <br />revenue is recorded only when the costs associated with the claims or unapproved change orders <br />have been incurred. Back charges to suppliers or subcontractors are recognized as a reduction of <br />cost when it is determined that recovery of such cost is probable and the amounts can be reliably <br />estimated. Disputed back charges are recognized when the same requirements described above for <br />claims accounting have been satisfied. <br />12 <br /> <br />
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