COPT Defense Properties Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Construction Contract and Other Service Revenues

Construction Contract and Other Service Revenues

12 Months Ended

Dec. 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 Years Ended December 31,
	2019		2018		2017
Construction contract revenue:
GMP	$	67,708	$	34,050	$	78,401
FFP	10,688		20,327		22,607
Cost-plus fee	34,386		5,540		801
Other	981		942		1,031
	$	113,763	$	60,859	$	102,840

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



	For the Years Ended December 31,
	2019		2018		2017
Construction contract revenue:
Construction	$	112,170	$	57,986	$	94,471
Design	612		1,931		7,338
Other	981		942		1,031
	$	113,763	$	60,859	$	102,840

We derived 74% of our construction contract revenue from the USG in 2019, 95% in 2018 and 98% in 2017.

We recognized revenue of $53,000, $349,000 and $586,000 in 2019, 2018 and 2017, 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 Years Ended December 31,
	2019		2018
Beginning balance	$	6,701	$	4,577
Ending balance	$	12,378	$	6,701

Contract assets, which we refer to herein as construction contract 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 Years Ended December 31,
	2019		2018
Beginning balance	$	3,189	$	4,884
Ending balance	$	17,223	$	3,189

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



	For the Years Ended December 31,
	2019		2018
Beginning balance	$	568	$	27,402
Ending balance	$	1,184	$	568
Portion of beginning balance recognized in revenue during the year	$	446	$	27,296

The change in the contract liabilities balance reported above for 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 December 31, 2019 that will be recognized as revenue in future periods was $79.0 million, approximately $29 million of which we expect to recognize in 2020.

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 in 2019, 2018 and 2017.