Changes in Cost and Progress Estimates under the Percentage-of-Completion Method
First written in FY2020. 2 of 5 entries say "Restated". Latest entry: FY2026.
Mitani Sekisan moved to the "Worse" side of this theme in 2024, 1 year before the typical company in this theme (2025).
The whole theme swung hardest in 2024: 11 of 70 companies on the "Worse" side.
41 other companies' latest entry also says "Restated".
- FY2026RestatedAnnual report
「As the method for estimating progress toward satisfying performance obligations, we apply the input method, based on the ratio of actual costs to estimated total costs.」
It reiterates, together with the explanations of revenue recognition and contract assets, the risk that revisions to estimated costs and revenue as construction progresses and the duration of negotiations over additional and modified construction work and contract changes may affect performance. - FY2025ReframedAnnual report
「Our Group's core pile business enters into contracts with customers for the sale of concrete pile products and construction work, carries out pile construction, identifies the sale of concrete pile products and construction work as a single performance obligation, and recognizes revenue over time as the performance obligation under the contract is satisfied.」
It organizes the existing risk of changes in estimated costs and progress under the percentage-of-completion method to include revenue recognition, contract assets, revenue estimates for additional and modified construction work, and the duration of negotiations over contract changes. - FY2024WorsenedAnnual report
「In pile construction projects undertaken by our Group, unprofitable projects may arise as a result of price competition when construction contracts are entered into. If delays occur because of changes to the design of projects in progress, revisions to construction schedules by customers, tight production schedules for products or other factors, estimated total costs may exceed total revenue, resulting in a construction loss and the recognition of a provision for construction losses, which may affect the performance of our Group.」
In addition to the existing risk of changes in estimated construction costs and progress, it explicitly identifies the emergence of unprofitable projects due to price competition at the contract stage and specifies this as a risk that could lead to the recognition of a provision for construction losses. - FY2021RestatedAnnual report
「Applying the percentage-of-completion method requires reasonable estimates of total contract revenue, total contract costs and the stage of completion at the reporting date.」
It reiterates the risk that changes in estimates of construction revenue, costs and the stage of completion under the percentage-of-completion method may affect performance. - FY2020First statedAnnual report
「Our Group's core pile business applies the percentage-of-completion method, with progress estimated based on the cost-to-cost method. To ensure accurate revenue recognition, we engage in appropriate cost management, including continuously reviewing estimated costs and scheduled construction periods for each project. If such reviews become necessary, however, they may affect the performance of our Group.」
It identifies for the first time, as a business risk, the possibility that revisions to estimated costs and scheduled construction periods under the percentage-of-completion method may affect performance.