WIP schedule: what it shows and how to build one each month

A work-in-progress schedule, usually shortened to WIP schedule or WIP report, is a one-page table of every open contract job: what the contract is worth, what has been spent, what is left to spend, how far along the job is, and whether billing is ahead of or behind the work. Contractors build it monthly or quarterly. Owners use it to see which jobs are drifting, banks read it with the financial statements, and sureties ask for it before they write or extend bonds.

This guide covers what goes on a WIP schedule, how each number is worked out, and a routine that makes the monthly build predictable.

What a WIP schedule answers

A contractor's income statement shows revenue and profit for the period, but it hides the question a surety or lender cares most about: are the open jobs going to make the money they were bid to make? The WIP schedule answers that one job at a time. Each row tells you:

• How complete the job is, measured by cost spent against the total cost now expected.
• How much revenue has been earned, given that percentage.
• Whether billing is ahead or behind, which is the over or under billing.
• What profit the job is now expected to make, compared with what it was bid at.

Read across several months, the schedule also shows trends: a job whose expected profit shrinks every month (often called profit fade), or a company that is consistently under billed.

The columns

Most WIP schedules use the percentage-of-completion method measured by cost, sometimes called cost-to-cost. Column names vary between firms and between the forms sureties hand out, but the content is close to this:

Many sureties also ask for a completed-contracts schedule for jobs that finished during the year, so they can compare the profit a job ended with against the profit it showed while it was open.

The math, worked through

Take an example job: a clinic fit-out with a $1,240,000 contract. Through September the job has cost $520,800 and been billed $812,000. The project manager expects another $319,200 to finish it.

1. Estimated total cost = 520,800 + 319,200 = 840,000
2. Percent complete = 520,800 / 840,000 = 62%
3. Earned revenue = 62% x 1,240,000 = 768,800
4. Over / (under) billing = 812,000 - 768,800 = 43,200 over billed
5. Estimated gross profit = 1,240,000 - 840,000 = 400,000

Every number except cost to complete comes straight from the books. Cost to complete is a judgment, and it moves every other column. That is why the cost to complete estimate deserves as much care as the bookkeeping does.

What readers look for

Each reader has their own policies, so ask yours what they want and when. In general:

• Under billing. Billing behind the work can be harmless timing, but it can also mean costs are running over and have not been billed because they cannot be. A pattern of under billing gets questions. The underbillings guide covers how to read it.
• Over billing. Billing ahead of the work brings in cash early. It is also money owed back in work, so readers check it against cash on hand.
• Profit fade. A job bid at 15% margin that shows 12% this month and 9% next month is a warning even if every number is right.
• Projected losses. When estimated total cost exceeds the contract, accounting practice is normally to recognize the whole expected loss now, not as the job proceeds. Your CPA decides how that is presented.
• Consistency. The schedule should tie to the financial statements: total earned revenue and cost should match the income statement for the same period, and the net over or under billing should match the balance sheet.

A monthly routine

Most of the work in a WIP schedule is not the math. It is getting the inputs in on time. A routine that holds up:

1. Close job costs first. Post vendor bills, payroll and subcontractor invoices for the month, so cost to date is complete. A missing sub invoice understates cost and overstates profit.
2. Pull cost and billing by job. Run a job-level report from your accounting system for the period, through the period end. In QuickBooks Online that is usually Profit and Loss by Customer or by Class; see WIP reports in QuickBooks.
3. Update contract amounts. Add change orders approved since last month. Leave pending ones out unless your policy says otherwise, and be consistent.
4. Collect cost to complete. Send each project manager their jobs, with cost to date and last month's estimate, and a deadline.
5. Build and check. Fill the schedule, then review every job where percent complete went down, estimated total cost moved sharply, or a loss appears.
6. Lock and send. Save a final version for the period, then send it to the owner, bank or surety. Keep the history; next month starts from it.

A checklist for step 5:

• Every open job has a cost to complete for this period, not last month's.
• No job's percent complete went down without a reason in the notes.
• Jobs with costs but no contract amount are either set up or explained.
• Total earned revenue ties to the income statement.
• Retainage on the schedule ties to retainage receivable.

Building it in a spreadsheet

Most small contractors build the schedule in Excel, from a template that carries the formulas. That works, and the WIP schedule template guide lists the columns and formulas to use. The friction is the monthly cycle around it: pasting the export into the right rows, chasing estimates by email, and rebuilding the file when a job is added or renamed.

How WIP Monthly builds it

WIP Monthly builds this schedule from your QuickBooks Online export. You upload the Profit and Loss by Customer (or by Class) report each month, and it reads cost to date and billed to date for every job. Each project manager gets an email with a link to enter cost to complete, no account needed, and a reminder each weekday morning until they do, up to five. The schedule shows percent complete, earned revenue, over and under billing, retainage and estimated gross profit, flags missing estimates and the warnings above, and lets you override any figure with a note. When you finalize the month it makes a PDF and an Excel file to send.