6.17 Work in progress

Work in progress generally has a term of less than 12 months.

Within the Living segment, for a limited number of contracts with home buyers, the final payment instalment becomes due to the Group only when the home is resold by the customer. On this resale, the Group is also entitled to a pre-agreed fixed percentage of the change in value (positive or negative) of the home. These components are inextricably linked and should be regarded as variable consideration. This consideration becomes fixed only at the time of settlement at the civil-law notary upon resale of the home. In this context, the Group has recognised a (non-current) work in progress debit of € 6.6 million. (2024: nil).

The project owner and the management of the unit involved perform a periodic assessment of the carrying amount of work in progress for each project. This assessment is based on the project files, project administration and the knowledge and experience of the employees involved. Inherent in this process is that estimates must be made and that the Group is involved in negotiations and discussions on the financial settlement of projects, such as contract reductions and variations, claims, arbitration and penalties, the timing of completion and the quality level of the work. Final outcomes may differ from the estimates made. This risk is particularly present in multi-year projects with a high degree of customisation and in ongoing claims or variation discussions that are still being discussed with customers at the reporting date.

The estimates referred to are subject to greater uncertainty as:

• projects are still at the design stage. During the elaboration of a preliminary design into a final design, significant deviations from the preliminary design may come to light. This may lead to positive or negative adjustments to the initial forecast;

• the contract types and the specific arrangements agreed under them entail a higher risk for the Group. For example, under a Design & Construct (DC) contract, the Group bears the full design risk. Under Design, Build, Maintain & Operate (DBMO) contracts, responsibility includes, in addition to design and construction, maintenance and operation over the contract term.

In addition, the degree of uncertainty may be further influenced by external factors such as market conditions, availability of materials, labour shortages and changes in laws and regulations, which affect costs, completion dates and contractual obligations. Various opportunities and risks also arise during the execution phase of projects. This may include, among other things, variations, claims and unforeseen circumstances that may be for the Group’s account.

No material amounts have been deducted from work in progress debit in respect of expected credit losses. No material items have been recognised in respect of incremental costs to obtain or fulfil a contract.

With the acquisition of Hegeman Bouw & Services B.V., the Group also acquired ongoing contracts that were recognised as work in progress at the acquisition date. At the acquisition date, work in progress debit amounted to € 15.0 million and work in progress credit to € 22.7 million (see note '6.2 Business combinations'). The fair value of the margin still to be realised on these contracts is included as part of the acquired order book under intangible assets (see note '6.12 Intangible assets').