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Repair Windows errors before they cause bigger problemsFix Now →Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →A contract award can add work to a construction company’s reported backlog, but it does not by itself create recognized revenue or cash. Revenue generally follows work performed under the contract, while cash depends on billing, customer payment, project costs, and terms such as retainage. To judge what an award means financially, look at how the company defines backlog and how quickly—and profitably—it expects to perform and collect on the work.
What a contract award changes—and what it does not
Backlog is a company-reported measure of expected future work, not a standard accounting balance and not cash in the bank. An award may be added to backlog when a company considers the work sufficiently committed under its own definition. That point may come before or after a fully executed contract, funding, or a notice to proceed, depending on the issuer’s policy.
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The basic sequence is award or contract commitment, possible addition to backlog, work performed, revenue recognized, and billing and collection. These events need not happen on the same dates. Backlog is generally reduced as revenue is recognized, but adjustments to contract scope, estimated value, funding, or project status can also change it.
For example, Tutor Perini’s 2025 Form 10-K gives this roll-forward for the year ended December 31, 2025:
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| Backlog movement | Amount |
|---|---|
| Beginning backlog | $18,673.9 million |
| New awards | +$7,428.9 million |
| Revenue recognized from backlog | −$5,543.0 million |
| Ending backlog | $20,559.8 million |
The company says new awards include original contract prices of projects added to backlog, plus or minus subsequent changes to estimated total contract prices on existing contracts. The roll-forward is a company-specific illustration, not a universal formula for every contractor’s reported backlog.
How backlog converts to revenue
Revenue is recognized as a company satisfies its performance obligations; for many construction contracts, that occurs over time as work progresses. In a cost-to-cost input method, costs incurred to date are compared with estimated total costs to measure progress. The method is intended to reflect the transfer of control, but reported revenue and profit depend on estimates of total contract revenue and cost.
Granite Construction’s 2025 filing describes its construction-segment revenue as ordinarily recognized over time using a cost-to-cost input method. It also says the company recognizes the full estimated loss on an uncompleted performance obligation when evidence indicates estimated total cost will exceed estimated revenue. This describes Granite’s disclosed policy and should not be assumed to apply identically to every contract or contractor.
Forecast changes can affect the amount and timing of reported revenue and profit as a project proceeds. Relevant factors can include revised quantities, site conditions, labor and materials costs, subcontractor performance, claims, incentives, and approved or pending change orders. An award’s face value therefore does not establish how much revenue will be recognized in a particular period or what margin the work will earn.
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Why backlog definitions matter when comparing contractors
Two companies’ headline backlog totals may measure different things. A company may count only executed, funded contracts, while another may also include certain awarded work, options, or task orders it considers probable. Backlog can also differ from remaining performance obligations because of the issuer’s inclusion criteria and treatment of contract termination provisions.
Granite Construction’s “Committed and Awarded Projects” measure at December 31, 2025 shows why the components matter:
| Granite Construction component | Amount at December 31, 2025 | What it represents in the company’s measure |
|---|---|---|
| Unearned revenue | $4,123.1 million | Expected future revenue on executed contracts, subject to the company’s stated conditions. |
| Other awards | $2,846.3 million | May include certain CM/GC construction work and options or task orders not yet exercised or issued when execution, funding, exercise, or issuance is considered probable. |
| Total committed and awarded projects | $6,969.4 million | The sum of the company’s two defined components. |
Before treating a backlog number as evidence of secure future sales, check what qualifies for inclusion, whether the work is funded and executable, and whether it can be cancelled or reduced. AECOM’s 2024 filing, for example, says its backlog can include awarded work before a signed contractual agreement and explains that its backlog differs from remaining performance obligations, including in its treatment of termination provisions. AECOM also cautions that there is no assurance all backlog will be realized.
Why awards do not equal cash flow
An award is an expected contract value; operating cash flow reflects actual cash receipts and payments. A contractor may pay workers and suppliers before collecting from a customer, or receive an advance before performing the related work. Progress billing, collection delays, receivables, and retainage all affect when cash arrives.
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Contract assets and liabilities can help explain differences between revenue and cash receipts. A contract asset can arise when revenue has been earned but the company has not yet billed under the contract terms. A contract liability can arise when the company has billed or received payment ahead of performing the work or recognizing revenue. Retainage withheld from payment can delay collection even after work has been performed and billed.
Tutor Perini reported $748.1 million in cash flow from operations for 2025, the year ended December 31, 2025, and attributed it largely to collections from newer and ongoing projects, and to a much lesser extent to collections related to recent dispute resolutions. That is a company-specific explanation of its reported cash flow, not evidence that awards caused the cash result or a forecast for other contractors.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How long backlog may take to turn into revenue
Backlog can represent work scheduled across multiple years, so its timing matters as much as its size. Tutor Perini’s 2025 Form 10-K estimated that approximately $6 billion, or 29% of its backlog at December 31, 2025, would be recognized as revenue in 2026. It also said most Civil segment backlog typically converts over three to five years, while Building and Specialty Contractors backlog typically converts over one to three years. These are Tutor Perini’s estimates and segment-specific disclosures, not industry conversion rates.
The filings cited here do not establish a universal industry-wide rate for converting awards into revenue or cash. For any company, examine its own expected timing and historical conversion rather than applying another contractor’s schedule.
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A practical checklist for assessing an award or backlog figure
- Inclusion rules: Does backlog require an executed contract, funding, or a notice to proceed, or can it include award notices, probable options, or other unexercised work?
- Execution and funding: Is the project funded and ready to proceed, and are the company’s rights to payment enforceable?
- Timing and roll-forward: How much work is expected to convert by year or segment? Compare beginning backlog, awards, revenue recognized, adjustments, and ending backlog.
- Revenue and margin estimates: What contract type and cost assumptions apply? Look for estimate revisions, claims, change orders, incentives, and provisions for expected losses.
- Cash conversion: Review billing terms, receivables, contract assets and liabilities, retainage, collections, and operating cash flow.
- Concentration and project risk: Consider reliance on major customers or projects, cancellation or scope-change exposure, disputes, and work expected to lose money.
A larger backlog can signal a fuller pipeline of expected work, but it may also include work that is delayed, subject to conditions, revised, or less profitable than expected. The company’s definition, execution readiness, conversion schedule, estimated economics, and collection record determine how informative the headline figure is.
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