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A contract award can add work to a construction company’s backlog, but it does not by itself create recognized revenue, profit, or cash. Backlog tracks expected future work under the company’s own definition; revenue is recognized as work is performed; and cash arrives according to billing, payment, and project-cost timing.
What happens after a contract award?
The usual sequence is award or contract commitment, possible addition to the company’s backlog measure, work performed, revenue recognized, and then billing and collection. It is a useful way to understand the moving parts, not a fixed accounting schedule: the award, contract execution, funding, construction progress, billing, and payment can occur at different times.
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Backlog is generally a company-defined measure of expected future work, not a standardized accounting balance. Companies may include different kinds of awards, and backlog can change as contract estimates, funding, scope, or project status changes. It is reduced as revenue is recognized, but may also be adjusted for other reasons.
A roll-forward example
Tutor Perini’s 2025 Form 10-K reports this backlog roll-forward for the year ended December 31, 2025: $18,673.9 million beginning backlog, plus $7,428.9 million in new awards, less $5,543.0 million of revenue recognized, equals $20,559.8 million ending backlog. The company says new awards include original contract prices added to backlog as well as subsequent changes to estimated total contract prices of existing contracts. Tutor Perini 2025 Form 10-K
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Why definitions change the headline
Granite Construction’s 2025 annual report separates “Committed and Awarded Projects” into unearned revenue and other awards. Unearned revenue covers expected future revenue on executed contracts subject to the company’s stated conditions. Other awards can include certain construction-manager/general-contractor work, options, or task orders that have not yet been exercised or issued when execution, funding, exercise, or issuance is considered probable. At December 31, 2025, Granite reported $4,123.1 million in unearned revenue and $2,846.3 million in other awards, for $6,969.4 million total. Granite Construction 2025 annual report
These figures illustrate why two companies’ backlog totals are not automatically comparable. An award notice, an executed contract, funded work, an option, and a probable task order do not carry the same degree of certainty or timing.
How does backlog convert to revenue?
Revenue is recognized as a company satisfies its performance obligations, not merely when it wins a job. For many construction contracts, performance occurs over time. Granite says its construction-segment revenue is ordinarily recognized over time using a cost-to-cost input method: costs incurred to date are compared with estimated total costs to measure progress. Granite Construction 2025 annual report
Under that method, the progress measure depends on estimates of the remaining work. Changes in forecast labor, materials, subcontractor costs, site conditions, quantities, claims, or change orders can affect estimated total contract revenue and cost, and therefore reported revenue and profit as work proceeds. Granite states that it recognizes the full estimated loss on an uncompleted performance obligation when evidence indicates its total estimated cost will exceed estimated revenue. The method and its estimate sensitivity are company-specific disclosures; contract terms and accounting outcomes can differ across companies and projects.
Timing depends on the work mix
Backlog may represent work expected to convert across multiple years. Tutor Perini’s 2025 Form 10-K says most of its Civil segment backlog typically converts to revenue over three to five years, while its Building and Specialty Contractors backlog typically converts over one to three years. Those are Tutor Perini’s stated timelines, not general construction-industry benchmarks. The company estimated that approximately $6 billion, or 29%, of its December 31, 2025 backlog would be recognized as revenue in 2026. That, too, is a company estimate, not a standard conversion rate. Tutor Perini 2025 Form 10-K
Why an award does not mean cash
An award represents expected contract value; operating cash flow records actual cash received and paid. A contractor may incur payroll and supplier costs before billing or collection, or receive customer advances or progress payments before recognizing the related revenue. Retainage can delay collection of part of the billed amount.
Contract assets can reflect revenue earned but not yet billable under contract terms. Contract liabilities can reflect billings or payments received ahead of the related work or revenue. These balances help explain why revenue recognized during a period and cash collected during that period can diverge.
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1Repair Windows errors before they cause bigger problems2Scan for outdated or missing drivers - takes under a minute3Clear out junk files and repair common Windows errorsTutor Perini reported $748.1 million of cash flow from operations for 2025 and attributed it largely to collections from newer and ongoing projects, and to a much lesser extent, collections related to recent dispute resolutions. This is a company-specific explanation of that year’s cash flow, not evidence that awards caused the result. Granite’s 2025 annual report also discusses contract assets and liabilities, including costs in excess of billings, collection of contract retention, and revenue recognized from contract-liability balances carried over from prior year ends. Tutor Perini 2025 Form 10-K · Granite Construction 2025 annual report
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How to judge backlog quality
A large backlog can still be delayed, revised, unprofitable, or never fully realized. Before using the number to assess a contractor, check how much rests on firm, funded work; when the work is expected to convert; and whether project estimates and collection patterns support the headline.
- Inclusion rules: Does the definition require an executed contract or notice to proceed, or can it include award notices, letters of intent, options, task orders, or probability-based awards?
- Funding and enforceability: Is the work funded and executable, and are the company’s rights to consideration supported by the contract?
- Roll-forward and timing: Review beginning backlog, awards, recognized revenue, adjustments, ending backlog, and any disclosed conversion horizon.
- Revenue and margin estimates: Consider contract type, forecast cost and revenue changes, claims, change orders, incentives, and loss provisions.
- Cash conversion: Look at billing terms, contract assets and liabilities, receivables, retainage, collections, and operating cash flow.
- Concentration and project risk: Identify exposure to major customers or projects, disputes, cancellations, scope changes, and expected losses.
Backlog is not the same as remaining performance obligations, and companies can define it differently. AECOM’s 2024 filing says its backlog may include awarded work before a signed contractual agreement and explains that its measure differs from remaining performance obligations, including because of how termination provisions are treated. It also cautions that there is no assurance the full backlog will be realized. AECOM 2024 filing
The cited 2025 filings provide company examples, not a universal industry-wide award-to-revenue or award-to-cash conversion statistic. Use each contractor’s definition, project mix, and timing disclosures rather than treating one company’s figures as a benchmark for the sector.
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