Declining Profitability of Contract-Based Development Projects Due to Specification Changes and Defects
First written in FY2016. 9 of 15 entries say "Mitigated", first in FY2023-Q3. Latest entry: 2026-08-14.
The whole theme swung hardest in 2017: 9 of 31 companies on the "Worse" side.
15 other companies' latest entry also says "Mitigated".
- 2026-08-14MitigatedEarnings presentation
「Profit margins improved through stronger profitability management.」
States that profit margins in the Digital Solutions business improved through stronger project profitability management. - FY2026MitigatedAnnual report
「This led to improvement in profitability through higher project quality and more rigorous project profitability management in the Digital Solutions business.」
The company explained that profitability for individual projects improved through higher quality in contracted projects and more rigorous project profitability management. - FY2026-H1MitigatedAnnual report
「Provision for loss on orders ¥31.058 million —」
Compared with the ¥31.058 million provision for loss on orders recognized in the previous interim period, none was recognized in the current interim period. - FY2025-H1MaterialisedAnnual report
「During the current interim consolidated accounting period, recruitment progressed and the Company began to have a clearer outlook for securing capabilities. Project profit and loss management and the delivery structure, which had been issues since the previous fiscal year, improved in part, but a loss-making project arose in the first quarter, for which a provision for contract loss was recorded. In the second quarter, the Company began discussions toward the early termination of a large project whose profitability had deteriorated, and recorded an allowance for doubtful accounts in connection with this matter.」
With challenges remaining in project profitability management and delivery capabilities, loss-making projects arose, leading to the recognition of provisions for loss on orders and doubtful accounts. - FY2024Issues remain in project profit and loss managementAnnual report
「During the current consolidated fiscal year, the Company handled projects steadily because responses to defects in some projects that arose in the previous fiscal year had been completed, but issues remained in project profit and loss management.」
Explains that responses to defects in some projects that had continued from the previous fiscal year had been completed, while issues remained in project profit and loss management. - FY2024-Q2MitigatedAnnual report
「During the current second-quarter consolidated accounting period, the Company handled projects steadily because responses to defects in some projects that arose in the previous fiscal year had been completed.」
Explains that responses to defects in some projects that arose in the previous fiscal year had been completed and that projects were handled steadily. - FY2024-Q1MitigatedAnnual report
「During the current first-quarter consolidated accounting period, the Company handled projects steadily because responses to defects in some projects that arose in the previous fiscal year had been completed.」
Explains that responses to defects in some projects that arose in the previous fiscal year had been completed, meaning that part of the specific impact of defect risks in contracted development had been addressed. - FY2023RestatedAnnual report
「If substantial changes to customer-requested specifications or the occurrence of defects result in expenses exceeding expectations, project profitability may deteriorate, potentially affecting the Company's financial condition and operating results.」
Continues to address the risk of deteriorating profitability from specification changes and defects in contracted development, together with measures concerning estimates, man-hours and quality control. - FY2023-Q3MitigatedAnnual report
「During the current third-quarter consolidated accounting period, earnings declined due in part to delays in accumulating projects, but responses to defects in some ongoing projects had been completed.」
Explains that responses to defects in some projects had been completed, meaning that part of the impact of the previously disclosed defects had been addressed. - FY2022RestatedAnnual report
「If substantial changes to customer-requested specifications or the occurrence of defects result in expenses exceeding expectations, project profitability may deteriorate, potentially affecting the Company's financial condition and operating results.」
Continues to address the risk of deteriorating profitability in contracted development projects due to specification changes and defects. - FY2017RestatedAnnual report
「If substantial changes to customer-requested specifications or the occurrence of defects result in expenses exceeding expectations, project profitability may deteriorate, potentially affecting the Company's financial condition and operating results.」
Continues to address the risk of deteriorating profitability in contracted development projects due to specification changes and defects. - FY2016First statedAnnual report
「If substantial changes to customer-requested specifications or the occurrence of defects result in expenses exceeding expectations, project profitability may deteriorate, potentially affecting the Company's financial condition and operating results.」
While working to improve estimation accuracy, man-hour management and quality control, indicates the potential for project profitability to deteriorate.