The WIP schedule, explained for contractors who have to produce one

A work-in-progress schedule lists every open job in one table and answers a question a profit and loss cannot: for the work performed so far, have you billed more than you earned, or less? On long jobs, revenue and billing move on different clocks, and the gap between them is where nasty surprises live.

What the columns are

• Contract value, including approved change orders — the revised contract.
• Estimated total cost to complete the job.
• Cost incurred to date.
• Estimated cost remaining, which is a field judgment, not an accounting output.
• Percent complete, most commonly cost to date divided by estimated total cost.
• Earned revenue, being percent complete multiplied by revised contract value.
• Billed to date.
• Over- or underbilling, being billed to date minus earned revenue.

Overbilling and underbilling

Overbilling means you have invoiced ahead of the work performed. It feels good — the cash is in the bank — but it is a liability on the balance sheet, sometimes labeled billings in excess of costs. That cash has to fund work still to be performed. A contractor coasting on aggregate overbillings while individual jobs run over is describing the classic path to insolvency.

Underbilling is the opposite: work performed that has not been invoiced. It is an asset, costs in excess of billings, and it usually points at an administrative failure — unbilled change orders, a missed draw, or a stalled approval. Underbilling is you lending money to the project at zero percent.

Reading the schedule as a group, not job by job

Once you have five or six jobs on one page, the totals tell you something individual jobs cannot. Add up net overbilling across the company: that figure is roughly how much of your current bank balance is customer money for work you still owe. Contractors who feel comfortable because the account looks healthy are often looking at a large overbilled position, which unwinds as those jobs finish. Track it monthly and the pattern becomes obvious well before it becomes a problem. Watch the trend in total estimated gross profit too — if the expected margin across open jobs drifts down three months running, your bidding assumptions have moved and it is worth finding out where. See our general contractor bookkeeping page walks through how these schedules get built each month.

Reading it monthly

Compare gross margin percent per job against what was bid. A job drifting down two or three points a month is telling you something while you can still act — reprice the remaining change orders, tighten the schedule, or at minimum stop bidding similar work the same way. Look also at the direction of the over/underbilling column: a job sliding steadily into underbilling is a billing process problem, and it is usually fixable in an afternoon.

If a bank or surety requires a formally reviewed or audited schedule, that attest work comes from your own CPA firm. What a bookkeeping partner provides is the accurate, job-coded cost data the schedule is built from, prepared monthly rather than reconstructed once a year.

A worked example: one job, mid-flight

A $180,000 job you estimated at $144,000 of cost, giving a $36,000 expected gross profit. At month end you have spent $93,600 of cost and invoiced $126,000.

• Percent complete by cost: $93,600 divided by $144,000 is 65 percent.
• Revenue earned to date: 65 percent of $180,000 is $117,000.
• You have billed $126,000, which is $9,000 more than you have earned.

That $9,000 is overbilling. It is real cash in your account and it is not profit — you owe the customer $9,000 of work. Reported without adjustment, this month looks better than it was, and the month you finish the job will look worse than it is. Underbilling is the mirror image: work performed that you have not invoiced, which is profit you have earned and cash you have not asked for.

Why the estimate matters as much as the actuals

Percent complete is only as good as your estimated cost to complete. If costs have run ahead and you have not updated the estimate, percent complete is overstated, earned revenue is overstated, and the job appears healthier than it is right up until it closes. Update the cost-to-complete figure every month with your field lead, based on what is actually left to do rather than what the original bid said.

What underbilling usually means

Persistent underbilling across several jobs is rarely a paperwork accident. It is usually unbilled change orders, milestones met but not invoiced, or a billing cycle that runs behind the work. All three are fixable, and all three are costing you cash right now.

Running it monthly without it becoming a project

1. List every open job with contract value including approved change orders.
2. Pull cost to date from your job cost report — which only works if costs are coded to jobs as they happen.
3. Ask the field lead for a current cost to complete, not a percentage guess.
4. Calculate earned revenue and compare it to billed to date.
5. Look at the two extremes first: the most overbilled and the most underbilled job. Those two conversations are where the month's real information is.