From my understanding the over-runs are a result from management drastically underestimating costs back in 2016.
By underestimating the costs they were able to inflate revenue for the first half of that year. Apparently this is still coming back to bite them.
They use % of completion accounting which is why this was able to work the way it did.
In case people don't know it works like this:
Take a simple example project with ESTIMATED costs for a $20M contract are $10M total expenses. Let us say this project is completed over four quarters.
If in the first quarter you spend $2.5M (25% of total estimated expenses) on the project, then you can book $5M in revenue (25% of total project revenue). This is regardless of what you actually billed or actually completed.
But let's say your estimate was very bad and the project actually cost a lot more, say $15M and those extra costs are all in the last quarter.
Your financial reports would look like this:
Q1: 5M rev - 2.5M exp - 2.5M operating profit
Q2: 5M rev - 2.5M exp - 2.5M operating profit
Q3: 5M rev - 2.5M exp - 2.5M operating profit
Q4: 5M rev - 7.5M exp - negative 5M operating profit
So by having bad estimates you would consistently over-estimate revenue and profits at the start of projects, and consistently have higher costs (cost overruns) and lower profits at the end.
This is why the company had to disclose a weakness in their controls in their 10-K, because the process of making these estimates was flawed.
This also happened to inflate operating profit at precisely the time management needed it to be higher in order to obtain their stock compensation bonuses last year.
TLDR: This stuff was from before Chuck took over and there wasn't much he could do to stop it.
That said I don't think it is likely that Chuck will be able to turn around the company at this point, I just don't think he deserves much, if any, of the blame for it's failure.
