17. COMMITMENTS AND CONTINGENCIES Legal Matters From time to time we are a party to various claims, lawsuits and other legal proceedings that arise in the ordinary course of business. We maintain various insurance coverages to minimize financial risk associated with these proceedings. None of these proceedings, separately or in the aggregate, are expected to have a material adverse effect on our financial position, results of operations or cash flows. With respect to all such proceedings, we record reserves when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We expense routine legal costs related to these proceedings as they are incu rred. The following is a discussion of our significant legal matters: USAMRIID Claim On December 6, 2017, IES Commercial, Inc. filed suit in the United States District Court of Maryland in the matter USA for the use and benefit of IES Commercial, Inc. and IES Commercial, Inc. v. Manhattan Construction Co., Torcon, Inc., Manhattan Torcon A Joint Venture, Federal Ins. Co., Fidelity &amp; Deposit Co. of Maryland, Zurich American Ins. Co., and Travelers Casualty &amp; Surety Co . This suit related to a large project which has been ongoing since 2009, having originally been scheduled f or completion in early 2013. As the Company has previously disclosed, the Company entered into a subcontract in 2009 with Manhattan Torcon A Joint Venture (MTJV) to perform subcontracting services at the U.S. Army Medical Research Institute for Infectiou s Diseases (USAMRIID) replacement facility project for a contract value of approximately $ 61,146 , subject to additions or deductions. Because of delays on the project and additional work the Co mpany performed, the Company had sought in the suit approxima tely $ 21,000 for claims incurred as of August 31, 2017, and had expected to seek to recover approximately $ 4,500 of additional claims expected to be incurred following August 31, 2017 , through completion of the project. On January 22, 2018 the defendants i n this matter filed a motion to dismiss the suit, and on February 2 , 2018, we filed our response. On September 26, 2018, the District Court ruled on the motion to dismiss, granting it in part and denying it in part. The ruling, were it to withstand an ap peal, would likely have reduced the size of the Companys estimated damages claim by approximately 50%. Following mediation on September 26, 2018, the parties entered into a binding memorandum of agreement to settle all claims brought in the suit. The pa rties are currently preparing a formalized settlement agreement. Pursuant to the memorandum of agreement, the parties have agreed that in exchange for IES Commercial, Inc.s dismissal of the suit and completion of a limited scope of subcontracting work, a s well as mutual releases and parent guaranties by the parties, among other items, MTJV will make $ 2,500 in cash payments to IES Commercial, Inc., including $ 1,500 contingent upon completion of the remaining work. The Company recorded a charge of $ 1, 895 for the quarter ended September 30, 2018, in order to adjust the remaining contract value and scope of work to reflect the terms of the settlement. The Company had not previously recorded any recovery in connection with this claim. At September, 30, 201 8, based on our most current revised cost estimates, the Company estimates this project to be 99% complete . These estimated costs, and the revenue associated with them, will be recognized in future periods when the work is performed, and our estimates may be further adjusted in future periods as the work is completed. Risk-Management We retain the risk for workers compensation, employers liability, automobile liability, construction defects, general liability and employee group health claims, as well as pollution coverage, resulting from uninsured deductibles per accident or occurrence which are generally subject to annual aggregate limits. Our general liability program provides coverage for bodily injury and property damage. In many cases, we insure third parties, including general contractors, as additional insur eds under our insurance policies. Losses are accrued based upon our known claims incurred and an estimate of claims incurred but not reported. As a result, many of our claims are effectively self-insured. Many claims against our insurance are in the form o f litigation. At September 30, 2018 and 2017 , we had $ 6,202 and $ 6,204 , respectively, accrued for insurance liabilities. We are also subject to construction defect liabilities, primarily within our Resi dential segment. As of September 30, 2018 and 2017 , we had $ 171 and $ 218 , respectively, reserved for these claims. Because the reserves are based on judgment and estimates, and in volve variables that are inherently uncertain, such as the outcome of litigation and an assessment of insurance coverage, there can be no assurance that the ultimate liability will not be higher or lower than such estimates or that the timing of payments w ill not create liquidity issues for the Company. Some of the underwriters of our casualty insurance program require us to post letters of credit as collateral. This is common in the insurance industry. To date, we have not had a situation where an underwr iter has had reasonable cause to effect payment under a letter of credit. At September 30, 2018 , $ 6,101 of our outstanding letters of credit was utilized to collateralize our insurance program. Surety As of September 30, 2018 , the estimated cost to complete our bonded projects was approximately $ 50,170 . We evaluate our bonding requirements on a regular basis, including the terms offered by our sureties. We believe the bonding capacity presently provided by our current sureties is adequate for our current operations and will be adequate for our operations for the foreseeable future. Posting letters of credit in favor of our sureties reduces the borrowing a vailability under our revolving credit facility. Other Commitments and Contingencies Some of our customers and vendors require us to post letters of credit , or provide intercompany guarantees, as a means of guaranteeing performance under our contracts and ensuring payment by us to subcontractors and vendors. If our customer has reasonable cause to effect payment under a letter of credit, we would be required to reimburse our creditor for the letter of credit. At September 30, 2018 , $ 508 of our outs tanding letters of credit were to collateralize our vendors. From time to time, we may enter into firm purchase commitments for materials , such as copper or aluminum wire , which we expect to use in the ordinary course of business. These commitments are ty pically for terms of less than one year and require us to buy minimum quantities of materials at specific intervals at a fixed price over the term. As of September 30, 2018 , we had no such commitments. Some of the lease agreements enter ed into will not commence until the following fiscal year. The total future undiscounted cash flows related to lease agreements committed to but not yet commenced as of September 30, 2018 , is $ 962 .