Deterioration in profitability due to specification changes and defects in system development projects
First written in FY2017. 2 of 6 entries say "Mitigated", first in FY2018. Latest entry: FY2026.
Ubicom Holdings moved to the "Worse" side of this theme in 2025, 3 years after the typical company in this theme (2022).
The whole theme swung hardest in 2017: 9 of 38 companies on the "Worse" side.
1 other company's latest entry also says "Reframed".
- FY2026ReframedAnnual report
「In contract development, when recognizing revenue from contract-based work, we estimate the progress toward satisfying the performance obligation and recognize revenue over time for contracts in which the performance obligation is satisfied over a specified period. Estimates of the execution budget are highly project-specific because the scope and duration differ for each contract-based engagement, and because the scope of work may change when unforeseen events occur during the project. If it becomes necessary to revise the execution budget estimate again due to unforeseen changes in circumstances or other factors, the group’s operating performance and financial position may be affected.」
Expanded the scope of the explanation beyond the traditional risk of lower profitability due to specification changes and defects to include revenue recognition risks arising from changes in estimates of execution budgets and progress toward completion. - FY2026-H1MaterialisedAnnual report
「The response to an overrun on a contract-based project that occurred in the fourth quarter of the fiscal year ended March 2025 had a certain short-term impact on profitability, but these factors had largely subsided by the second quarter under review.」
An overrun on a contract-based project and its impact on profitability actually occurred. The factors behind the impact were stated to have largely subsided by the interim period under review. - FY2022MitigatedAnnual report
「In consideration of these risks, our group is strengthening initiatives to improve quality and gives priority, wherever possible, to quasi-mandate or staff-augmentation contracts. However, if the proportion of contract-based work increases and circumstances such as those described above occur, the group’s operating performance may be affected.」
Added the response of strengthening quality-improvement initiatives to address the risk of lower profitability due to specification changes, problems and post-acceptance defects. The policy of prioritizing quasi-mandate and staff-augmentation contracts remains in place. - FY2020RestatedAnnual report
「In consideration of these risks, our group gives priority, wherever possible, to quasi-mandate or staff-augmentation contracts. However, if the proportion of contract-based work increases and circumstances such as those described above occur, the group’s operating performance may be affected.」
Continued to outline the risk of lower profitability due to specification changes, problems and defects, and the response of prioritizing quasi-mandate and staff-augmentation contracts. - FY2018MitigatedAnnual report
「In consideration of these risks, our group gives priority, wherever possible, to quasi-mandate or staff-augmentation contracts. However, if the proportion of contract-based work increases and circumstances such as those described above occur, the group’s operating performance may be affected.」
Specified the response of prioritizing quasi-mandate or staff-augmentation contracts to address the risk of lower profitability due to specification changes and problems. However, risks remain if the proportion of contract-based work increases. - FY2017First statedAnnual report
「If specification changes or other problems arise during development and require work exceeding the hours initially estimated, we may have to bear the resulting costs. In addition, if a defect occurs in a system developed for a customer, including after customer acceptance has been completed, we may have to resolve it at our own expense.」
Outlined the possibility of lower profitability due to additional costs incurred when specification changes, problems or post-acceptance defects arise in contract development.