Contract Assets and Liabilities
The following summarizes information about our contract assets and liabilities: | | | | | | | | | | | |
| December 31, |
| (in millions) | 2025 | | 2024 |
| Information about contract assets: | | | |
| Contract assets | | | |
| Unbilled receivables - reimbursable contracts | $ | 1,100 | | | $ | 1,050 | |
| Contract work in progress - lump sum contracts | 46 | | | 88 | |
| Contract assets | $ | 1,146 | | | $ | 1,138 | |
| | | |
| Year Ended December 31, |
| 2025 | | 2024 |
| Information about contract liabilities: | | | |
| Revenue recognized that was included in contract liabilities as of January 1 | $ | 542 | | | $ | 511 | |
We periodically evaluate our project forecasts and the amounts recognized with respect to our claims and unapproved change orders. We include estimated amounts for claims and unapproved change orders in project revenue to the extent it is probable we will realize those amounts. As of December 31, 2025 and 2024, we had recorded $214 million and $244 million, respectively, of revenue associated with claims for costs incurred to date. The settlement of these claims, which are included in contract assets and accounts receivable on the balance sheet, may extend beyond one year. Additional costs, which will increase this balance over time, are expected to be incurred in future periods. We had up to $105 million and $23 million of back charges that may be disputed as of December 31, 2025 and 2024, respectively. Remaining Unsatisfied Performance Obligations
We estimate that our RUPO will be satisfied over the following periods:
| | | | | |
| (in millions) | December 31, 2025 |
| Within 1 year | $ | 12,047 | |
| 1 to 2 years | 6,106 | |
| Thereafter | 6,168 | |
| Total RUPO | $ | 24,321 | |
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.