• The structural designs are unique and require significant engineering and manufacturing efforts generally requiring more than one year in duration; • The contracts contain specific terms as to milestones, progress billings and delivery dates; and • Product requirements cannot be filled directly from the Company’s standard inventory. For each project, the Company prepares a detailed analysis of estimated costs, profit margin, completion date and risk factors which include availability of material, production efficiencies and other factors that may impact the project. On a quarterly basis, management reviews the progress of each project, which may result in revisions of previous estimates, including revenue recognition. The Company calculates the percent complete and applies the percentage to determine the revenues earned and the appropriate portion of total estimated costs. Losses, if any, are recorded in full in the period they become known. Historically, the Company’s estimates of total costs and costs to complete have approximated actual costs incurred to complete the project. Under the percentage-of-completion method, billings do not always correlate directly to the revenue recognized. Based upon the terms of the specific contract, billings may be in excess of the revenue recognized, in which case the amounts are included in customer prepayments as a liability on the Consolidated Balance Sheets. Likewise, revenue recognized may exceed customer billings in which case the amounts are reported in trade receivables. Unbilled revenues are expected to be billed and collected within one year. At December 31, 2014 and 2013, receivables included $68.0 million and $52.9 million of unbilled receivables, respectively. During 2014, there were 17 projects representing approximately 11% and 13% of the Company’s total revenues and product revenues, respectively, which were accounted for using percentage-of-completion accounting, and 21 projects during 2013 representing approximately 15% of the Company’s total revenues and 18% of product revenues, respectively. Revenues from the sale of inventory products, not accounted for under the percentage-of-completion method, are recorded at the time the manufacturing processes are complete and ownership is transferred to the customer. The Company earns service revenues from three sources: The Company does not install products for its customers, but it provides technical advisory assistance. At the time of delivery of the product, the customer is not obligated to buy or rent the Company’s running tools and the Company is not obligated to perform any subsequent services relating to installation. Technical advisory assistance service revenue is recorded at the time the service is rendered. Service revenues associated with the rental of running and installation tools are recorded as earned. Rework and reconditioning service revenues are recorded when the refurbishment process is complete. The Company normally negotiates contracts for products, including those accounted for under the percentage-of-completion method, and services separately. For all product sales, it is the customer’s decision as to the timing of the product installation as well as whether Dril-Quip running tools will be purchased or rented. Furthermore, the customer is under no obligation to utilize the Company’s technical advisory assistance services. The customer may use a third party or their own personnel. 39 • technical advisory assistance; • rental of running tools; and • rework and reconditioning of customer owned Dril-Quip products. Revenues not recognized under the percentage-of-completion method Service revenue