Uncertainty in Estimating Total Construction Costs under the Percentage-of-Completion Method
First written in FY2020. 4 of 6 entries say "Restated". Latest entry: FY2026.
The whole theme swung hardest in 2024: 9 of 64 companies on the "Worse" side.
39 other companies' latest entry also says "Restated".
- FY2026RestatedAnnual report
「For the accounting treatment of performance obligations satisfied over time, total construction revenue, total construction costs and the progress toward satisfying performance obligations must be reasonably estimated. Total construction costs, which are used to calculate progress toward satisfying performance obligations, are estimated based on the execution budget for each construction project. However, the execution budget involves uncertainty because construction types, construction periods, quantities and other factors may change as a result of weather, soil conditions and other natural factors, unexpected events relating to construction conditions, such as the discovery of additional underground obstructions, and design changes ordered by the customer (hereinafter, “design changes and other factors”).」
It continues to disclose uncertainty in estimates of total construction costs due to weather, soil conditions, underground obstructions and design changes ordered by the customer. - 2026-06-04RestatedGeneral Meetings of Shareholders
「The initial budget is subject to uncertainty because changes may arise in work types, construction periods and construction quantities due to natural factors such as weather, unforeseen events related to construction conditions such as unexpected soil conditions or the discovery of additional underground obstacles, and design changes made by the customer.」
The company continued to describe the uncertainty surrounding estimates of total construction costs and its specific causes. - FY2024ReframedAnnual report
「For the accounting treatment of performance obligations satisfied over time, total construction revenue, total construction costs and the progress toward satisfying performance obligations must be reasonably estimated. Total construction costs, which are used to calculate progress toward satisfying performance obligations, are estimated based on the execution budget for each construction project. However, the execution budget involves uncertainty because construction types, construction periods, quantities and other factors may change as a result of weather and other natural factors, unexpected events relating to construction conditions, such as the discovery of unexpected soil conditions or additional underground obstructions, and design changes ordered by the customer.」
It specifically identifies weather, unexpected soil conditions and underground obstructions, and changes in construction types, construction periods and quantities resulting from design changes ordered by the customer as sources of uncertainty in estimating total construction costs. Completed construction revenue recognized over time was ¥1,893.7 million. - FY2023-Q1RestatedAnnual report
「The challenging operating environment continues, including downside risks to the economy from higher raw-material prices and supply constraints, and the situation remains unpredictable.」
It indicates that uncertainty that could affect total construction costs and results continues due to higher raw-material prices and supply constraints. - FY2022RestatedAnnual report
「If total construction costs increase due to unexpected events, such as higher subcontracting and construction-material prices or additional costs incurred during construction for remedial work and other reasons, this may affect future results.」
It continues to disclose uncertainty in estimates of total construction costs due to higher subcontracting and construction-material prices and additional costs incurred during construction. - FY2020First statedAnnual report
「Because total construction costs, which form the basis for recognizing revenue under the percentage-of-completion method, involve uncertainty due to technical and physical factors, changes in quantities and specifications, responses to customer claims and other factors, they may cause fluctuations in the results of the group.」
It newly discloses that estimates of contract amounts, total construction costs and the progress toward satisfying performance obligations, which are required to apply the percentage-of-completion method, involve uncertainty due to specification changes, responses to customer claims and other factors and may cause fluctuations in results.