please explain this as simple as possible

After identifying the contract and the performance obligations within the contract, the next step for a construction contractor under ASC 606 is to determine the transaction price. The transaction price is the amount of consideration to which the contractor expects to be entitled in exchange for satisfying its performance obligations, excluding amounts collected on behalf of third parties (i.e., sales tax).

In the construction industry, the transaction price is generally the contract price under the terms of the contract and may include fixed amounts, variable amounts or both. Determining the transaction price under the new standard requires contractors apply judgment and document processes and controls related to variable consideration, noncash consideration and the existence of a significant financing component.