A contractor can have a signed price and still be learning what the job will cost. The design needs completing, specialist staff need time, and the customer may change the work. Between the original estimate and final delivery, the expected margin can move.
That makes the cost of the remaining work a useful starting point when reading engineering-company accounts. A larger order book describes prospective activity. To judge its economics, trace how the contract allocates overruns and how management updates the completion estimate.
Fact: fixed price covers different kinds of work
AECOM (NYSE: ACM) reported that fixed-price contracts represented 25% of fiscal 2025 revenue, with guaranteed maximum price contracts at 37% and cost-reimbursable work at 38%. Its 2025 annual report distinguishes a lump-sum job from an agreed price for each unit delivered. In the latter, the final payment depends on the number of units.
A guaranteed maximum price arrangement combines cost disclosure with an overall ceiling, subject to contractual adjustments. AECOM says overruns or delay costs can fall to it. The label needs the terms beneath it.
Jacobs Solutions (NYSE: J) reported 32% fixed-price and 68% cost-reimbursable revenue for its year ended 26 September 2025. Its annual report says fixed-price work mainly comprised professional services, with construction in limited cases. It also describes potential cost savings and overrun exposure under these arrangements.
Tetra Tech (Nasdaq: TTEK) reported a 43.5% fixed-price share of fiscal 2025 revenue. Its annual report for the year ended 28 September identifies estimation errors and completion delays among the risks. These are dated contract-mix examples, not a ranking of current project quality. Different services, risk limits and revenue definitions prevent a simple comparison of the percentages.
Tetra Tech: fixed-price revenue
Interpretation: the unfinished work sets the margin
Consider a hypothetical £10 million contract with expected total costs of £8 million. The expected project profit is £2 million, before corporate overhead, financing and tax. Suppose £4 million of costs have been incurred and all qualify as a faithful measure of progress. A simple cost-to-cost calculation puts completion at 50%.
Under those deliberately simplified assumptions, cumulative revenue would be £5 million and cumulative project profit £1 million. The calculation measures progress using incurred costs divided by total expected costs. AECOM describes that method for its fixed-price work; actual accounting also requires the relevant performance obligations and contract terms.
Now keep the signed price and incurred costs unchanged, but raise estimated total costs to £9 million. Progress becomes approximately 44.4%. Cumulative revenue becomes about £4.44 million and cumulative profit about £0.44 million. Against the earlier calculation, both fall by roughly £0.56 million.
The customer has not cancelled the job in this example. The contractor has reassessed what remains to be done. Tetra Tech describes recognising revisions to total estimated costs through a cumulative catch-up for performance obligations measured this way. The resulting accounting adjustment is separate from the timing of the next invoice or payment.
This example assumes one performance obligation, an unchanged transaction price, no excluded costs and no variable consideration. It is not an estimate of any named company’s project. Its purpose is to show why a completion forecast can affect today’s reported performance.
A changed scope needs a changed agreement
A revised drawing can mean more work. It does not, by itself, establish that the customer has accepted an additional bill. For a particular job, the useful evidence would identify what changed, who authorised it, which costs are recoverable and whether the parties agree on payment.
AECOM says lump-sum arrangements typically allow adjustments for scope changes or unforeseen conditions. That supports looking for contractual recovery rights; it does not establish that any particular claim will succeed. An analysis should preserve the distinction between an agreed amendment and a contested request.
Cash timing remains a further question. Even an accepted additional price may be paid after staff and suppliers need paying. Conversely, an advance payment can ease funding while substantial work remains. A project-margin adjustment and a cash shortfall describe different stages of the process.
Interpretation: Who could benefit?
For Jacobs, the opportunity is to complete fixed-price professional work with fewer resources than the price assumed, where the terms allow the saving to remain with the contractor. The operating benefit would develop across the project’s delivery period. Evidence would include stable scope, achieved milestones and a favourable reconciliation of estimated and actual costs.
AECOM could benefit from the same execution discipline on applicable work, while its contract mix means the relevant mechanism must be checked job by job. Tetra Tech’s disclosed fixed-price activity also creates a direct connection between delivery efficiency and project economics. These are conditional routes to margin, not claims that all three have unidentified savings waiting to be recognised.
The cited mix figures establish that exposure exists. They do not quantify a group earnings uplift: the reports do not provide a common measure of remaining cost sensitivity across the three businesses.
Interpretation: Who’s at risk?
The same contractors bear the opposite exposure where they must absorb additional effort. Extra design hours, subcontractor problems or late completion can consume the anticipated surplus. Materiality depends on the size of affected work, remaining obligations and contractual protections, rather than the headline value of the order book.
Jacobs also warns that some reimbursable arrangements link fees to cost and schedule outcomes. AECOM’s maximum-price category deserves separate attention, and Tetra Tech’s risk discussion connects completion problems with fixed-price profitability. Reimbursable work therefore needs its own examination; changing the pricing label does not settle every performance risk.
None of these disclosures establishes a newly troubled project. Treat a risk factor as a description of exposure and require specific evidence before alleging a current failure.
Speculation: two paths through the remaining work
One possible scenario is that clearer designs and better sequencing reduce remaining labour needs, allowing the initial margin to hold or improve. Another is that unresolved scope and repeated delays require a higher completion budget. Neither scenario is a forecast here, and no probability is assigned.
At the next update, look for changes in completion estimates, the status of contract amendments, delivered milestones and cash collected. Ask whether management has explained a movement in the expected margin on a consistent basis. A signed price begins the economic calculation. The work still to come determines how much of it survives.
Sources checked 30 October 2026. Annual disclosures retain their stated periods. This article explains business and accounting mechanisms and is not a recommendation to buy or sell a security.
Photo by Magda Ehlers on Pexels. Scaffolding around a building under construction.