RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Sorry sellers - globe today :) Per generally accepted accounting principles, the cost to complete is regularly updated regardless of ongoing claims and the updated cumulative figure shared during the quarterly results. The backlog therefore included the additional cost.
The cost to complete includes all costs to complete the project, such as labor, materials, equipment operating and depreciation cost and administrative costs as a percentage of the former three items. It also should include projected penalties for late completion per the contract. Because when the consortium is late, as is the case here, the owner has to pay interest on the capital cost without toll revenue to partially compensate.
Claims cannot be shown as receivables unless an agreement is reached which was the case last week for the Gordie Howe bridge (the bridge).
The resolution of the claim last week awarded 700m plus a time extension of 10 months. This means penalties will not apply from the intial date of completion (IDC) + 10 months. This time extension is worth per my calculation about 200m. So the consortium can now add 700m + about 200m in receivables because this payment and penalty waiver are not conditional to any performance milestone. Our share is therefore 20% of 900m or about 180m which should reflect in the financial statements of Aecon. Whether this amount was already included in Q3 is possible because they said during the call that 3 of the 4 LSTKs had already been negotiated. It was also directly confirmed to be after the call with an upbeat tone. And there would be more to come.
The backlog has already reflected the additional cost to
complete the bridge and all other projects except the three new contracts (Go, SMRs, subway) we discussed yesterday.