Fluor Hits the Floor – $1.7B Loss: A Wakeup Call for the Construction Industry
The Texas-based construction company Fluor recently announced its 2019 financial results, revealing staggering figures brought on by the COVID-19 pandemic. This case sheds light on harsh truths and the new reality for the construction industry. Here’s what else you need to know:
- We are currently amidst a new wave of competitive bidding, where we find contractors bidding outside their niche.
- There is a decline in contractor backlog, meaning future uncertainty for 2021.
- Projects on backlog schedules are being delayed or canceled.
- Awarded projects are being rebid on before they even commence.
- Supply chains, no matter how robust they were before, are being disrupted at all levels.
- Material costs are increasing as the supply dwindles.
It is no surprise that the novel coronavirus (vigorously) stirred the pot for countless businesses, small and large. And while Fluor hasn’t completely shut its doors, its leadership team did have to revisit its business model in order to pivot and stay afloat. With that being said, here are a couple of action items we think your company should consider:
- Review your estimated costs to complete and profitability projections. Cost projections should reflect the increase in material costs.
- Review and identify relevant contract provisions on current and future projects.
- Keep communication lines open with owners, architects, and engineers that you have previously worked with in the past.
- Review your bid strategy and ask yourself these questions:
- Are we bidding on the right projects?
- Do we have accurate cost information in our bids?
- Should we stay within our niche?
If you have any questions on this topic, please contact Jason Dudas by clicking the button below.
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About Jason Dudas
CPA & Senior Manager
Jason is a Senior Manager in our Vienna, VA office. Since joining the firm in 2009, he has worked closely with clients on tax, audit and accounting issues. Jason has become an expert in construction accounting and is a member of the Real Estate and Construction CPA’s. He also has experience with research and development credits, and tangible property regulations.