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, 2020

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,
	2020		2019
Construction contract revenue:
Guaranteed maximum price	$	5,044	$	12,356
Firm fixed price	5,072		2,325
Cost-plus fee	3,309		2,060
Other	256		209
	$	13,681	$	16,950

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



	For the Three Months Ended March 31,
	2020		2019
Construction contract revenue:
Construction	$	12,883	$	16,489
Design	542		252
Other	256		209
	$	13,681	$	16,950

We recognized revenue of $32,000 in the three months ended March 31, 2019 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,
	2020		2019
Beginning balance	$	12,378	$	6,701
Ending balance	$	10,852	$	6,569

Contract assets, which we refer to herein as construction contract costs in excess of billings, net 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,
	2020		2019
Beginning balance	$	17,223	$	3,189
Ending balance	$	7,463	$	14,834

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,
	2020		2019
Beginning balance	$	1,184	$	568
Ending balance	$	1,417	$	1,005
Portion of beginning balance recognized in revenue during period	$	646	$	439

Revenue allocated to the remaining performance obligations under existing contracts as of March 31, 2020 that will be recognized as revenue in future periods was $74.1 million, approximately $26 million of which we expect to recognize during the remainder of 2020.

We incurred no deferred incremental costs to obtain or fulfill our construction contracts or other service revenues and had no significant credit loss expense on construction contracts receivable or unbilled construction revenue in the three months ended March 31, 2020 and 2019.