COPT Defense Properties Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Construction Contract and Other Service Revenues

Construction Contract and Other Service Revenues

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Construction Contract and Other Service Revenues

We disaggregate our construction contract and other service revenues by compensation arrangement and by service type as we believe it best depicts the nature, timing and uncertainty of our revenue. The table below reports construction contract and other service revenues by compensation arrangement (in thousands):



	For the Three Months Ended March 31,
	2019		2018
Construction contract revenues:
Guaranteed maximum price	$	12,356	$	20,486
Firm fixed price	2,325		6,435
Cost-plus fee	2,060		58
Other	209		219
	$	16,950	$	27,198

The table below reports construction contract and other service revenues by service type (in thousands):



	For the Three Months Ended March 31,
	2019		2018
Construction contract revenues:
Construction	$	16,489	$	25,915
Design	252		1,064
Other	209		219
	$	16,950	$	27,198

We recognized revenue of $32,000 and $309,000 in the three months ended March 31, 2019 and 2018, respectively, from performance obligations satisfied (or partially satisfied) in previous periods.

Accounts receivable related to our construction contract services is included in accounts receivable, net on our consolidated balance sheets. The beginning and ending balances of accounts receivable related to our construction contracts were as follows (in thousands):



	For the Three Months Ended March 31,
	2019		2018
Beginning balance	$	6,701	$	4,577
Ending balance	$	6,569	$	4,021

Contract assets, which we refer to herein as construction costs in excess of billings, are included in prepaid expenses and other assets, net reported on our consolidated balance sheets. The beginning and ending balances of our contract assets were as follows (in thousands):



	For the Three Months Ended March 31,
	2019		2018
Beginning balance	$	3,189	$	4,884
Ending balance	$	14,834	$	4,250

Contract liabilities are included in other liabilities reported on our consolidated balance sheets. Changes in contract liabilities were as follows (in thousands):



	For the Three Months Ended March 31,
	2019		2018
Beginning balance	$	568	$	27,402
Ending balance	$	1,005	$	8,279
Revenue recognized included in beginning balance	$	439	$	19,297

The change in the contract liabilities balance reported above for the three months ended March 31, 2018 was due primarily to our satisfaction of performance obligations during the period on a contract on which we previously received advance payments from a customer.

Revenue allocated to the remaining performance obligations under existing contracts as of March 31, 2019 that will be recognized as revenue in future periods was $51.6 million, approximately $45 million of which we expect to recognize during the remainder of 2019.

We have no deferred incremental costs incurred to obtain or fulfill our construction contracts or other service revenues and had no impairment losses on construction contracts receivable or unbilled construction revenue for the three months ended March 31, 2019 and 2018.