QUANTA SERVICES INC, QUANTA SERVICES MANAGEMENT ...

form of strategic alliance or long-term maintenance agreements. Strategic alliance agreements generally state an
intention to work together over a period of time and/or on specific types of projects, and many provide us with
preferential bidding procedures. Strategic alliances and long-term maintenance agreements are typically
agreements for an initial term of approximately two to four years that may include renewal options to extend the
initial term.
Backlog
Backlog represents the amount of revenue that we expect to realize from work to be performed in the future on
uncompleted contracts, including new contractual agreements on which work has not begun. Our backlog includes
estimates of revenues to be realized under long-term maintenance contracts in addition to construction contracts. We
determine the amount of backlog for work under long-term maintenance contracts, or master service agreements
(MSAs), by using recurring historical trends inherent in the current MSAs, factoring in seasonal demand and
projected customer needs based upon ongoing communications with the customer. The following tables present our
total backlog by reportable segment as of December 31, 2011 and 2010, along with an estimate of the backlog
amounts expected to be realized within 12 months of each balance sheet date (in thousands):
Backlog as of
December 31, 2011
Backlog as of
December 31, 2010
12 Month Total 12 Month Total
Electric Power Infrastructure Services ....
Natural Gas and Pipeline Infrastructure
$2,365,531 $4,959,964 $1,798,284 $4,473,425
Services ..........................
Telecommunications Infrastructure
768,152 1,347,173 743,970 1,026,937
Services .......................... 336,030 529,589 228,549 415,460
Fiber Optic Licensing ................. 102,773 402,007 98,792 402,299
Total .............................. $3,572,486 $7,238,733 $2,869,595 $6,318,121
As discussed above, our backlog includes estimates of revenues to be realized under MSAs. Generally, our
customers are not contractually committed to specific volumes of services under our MSAs, and many of our
contracts may be terminated with notice, typically 30 to 90 days, even if we are not in default under the contract.
There can be no assurance as to our customers’ requirements or that our estimates are accurate. In addition, many of
our MSAs, as well as contracts for fiber optic licensing, are subject to renewal options. For purposes of calculating
backlog, we have included future renewal options only to the extent the renewals can reasonably be expected to
occur. Projects included in backlog can be subject to delays as a result of commercial issues, regulatory requirements,
adverse weather and other factors, which could cause revenue amounts to be realized in periods later than originally
expected.
Competition
The markets in which we operate are highly competitive. We compete with other contractors in most of the
geographic markets in which we operate, and several of our competitors are large companies that have significant
financial, technical and marketing resources. In addition, there are relatively few barriers to entry into some of
the industries in which we operate and, as a result, any organization that has adequate financial resources and
access to technical expertise may become a competitor. A significant portion of our revenues is currently derived
from unit price or fixed price agreements, and price is often an important factor in the award of such agreements.
Accordingly, we could be underbid by our competitors in an effort by them to procure such business. Economic
conditions have increased the impacts of competitive pricing in certain of the markets that we serve. We believe
that as demand for our services increases, customers will increasingly consider other factors in choosing a service
provider, including technical expertise and experience, financial and operational resources, nationwide presence,
industry reputation and dependability, which we expect to benefit larger contractors such as us. In addition,
competition may lessen as industry resources, such as labor supplies, approach capacity. There can be no
8