WIP Schedule Calculator

Frequently Asked Questions

What is a WIP schedule in construction?

A work-in-progress (WIP) schedule is a report listing every open contract with its contract value, costs incurred to date, estimated total cost at completion, and amount billed to date. From those four inputs it derives percentage complete, revenue earned, and whether each job is overbilled or underbilled. It is the single report bonding agents, lenders, and CPAs ask for first, because it reveals whether reported profit is real or borrowed from future billings.

How do you calculate percentage complete on a WIP schedule?

The standard method is cost-to-cost: divide costs incurred to date by the estimated total cost at completion. If you have spent $600,000 of an estimated $1,000,000 in total cost, the job is 60% complete and you have earned 60% of the contract value as revenue. This is deliberately independent of how much you have billed — that separation is the entire point of the report, because it is what exposes over- and underbilling.

What is the difference between overbilling and underbilling?

Overbilling — formally 'billings in excess of costs and estimated earnings' — means you have billed more than you have earned. It is a liability on the balance sheet and it funds your cash flow with the customer's money. Underbilling — 'costs and estimated earnings in excess of billings' — means you have performed work you have not billed for. It is an asset, but a worrying one: it usually signals unprocessed change orders, missed billing deadlines, or cost overruns being absorbed quietly.

Is overbilling bad for a contractor?

Modest overbilling is normal and healthy — it means you are billing promptly and financing the job with the owner's money rather than your own. The risk is scale and dependency. Heavy overbilling across a portfolio means current cash is future revenue already spent, so as those jobs finish the billings stop while the costs continue. This is how a contractor with a strong bank balance runs out of money: the cash was never profit, it was an advance.

Why do bonding companies care about the WIP schedule?

Because it is the only report that shows whether a contractor's profit is earned or projected. A surety underwriter reads the WIP for three things: large underbillings, which suggest unbilled change orders or hidden overruns; heavy overbillings, which suggest cash dependency on advance billing; and downward revisions to estimated total cost, which show whether the contractor's own forecasts hold up. A clean, consistent WIP will support a larger bonding line than a strong income statement alone.

What causes a job to swing from overbilled to underbilled?

Usually change-order work performed before it is approved. The costs land in the WIP immediately, which raises percentage complete and earned revenue, while the contract value cannot rise until the change order is executed — so the job flips to underbilled in a single period. The other common cause is a cost overrun recognised late: raising the estimated total cost raises percentage complete against an unchanged contract value, which increases earned revenue and reduces the apparent overbilling.

How often should a contractor update the WIP schedule?

Monthly at minimum, aligned with the billing cycle, and the estimated total cost at completion must be genuinely re-forecast rather than carried forward. A WIP where the cost estimate never moves is not a forecast, it is a copy of the original bid, and it will hide an overrun until the job closes. The discipline that makes the report useful is the monthly conversation about what each job will actually cost to finish.

What is gross profit at completion on a WIP report?

Contract value minus estimated total cost at completion — the profit the job will deliver if the current forecast holds. Comparing it against the profit earned to date shows how much of the job's margin is still ahead of you. A job that is 80% complete but has recognised only half its expected profit is telling you the remaining 20% has to carry an unusually high margin, which rarely happens and usually means the cost forecast needs revising.