What is a WIP schedule? A plain guide for contractors

Your profit and loss statement tells you what you billed and what you spent. On a construction company that is not the same as what you earned. A job can be billed ahead of the work, billed behind it, or quietly heading toward a loss while invoices still go out on schedule.

The WIP schedule closes that gap. It recalculates revenue on every open job based on how far along the work actually is, compares that to what has been billed, and turns the difference into an adjustment on your books. Without it, your financial statements describe your billing, not your business.

Layouts vary, but a usable WIP schedule carries these columns for every open contract:

• Contract amount, including approved change orders.
• Estimated total cost, which is cost to date plus estimated cost to complete.
• Estimated gross profit, the contract amount minus estimated total cost.
• Cost to date, pulled from job costing.
• Estimated cost to complete, the remaining cost the project manager expects.
• Percent complete.
• Earned revenue, the contract amount times percent complete.
• Billed to date.
• Overbilling or underbilling, the difference between billed and earned.

A complete WIP also accounts for jobs that finished during the period. Leaving completed jobs off makes the schedule look cleaner than the year really was, and a surety reviewing it will notice.

Most contractors use the cost-to-cost method. Percent complete is cost to date divided by estimated total cost:

Percent complete = cost to date ÷ (cost to date + estimated cost to complete)

Everything downstream depends on the estimated cost to complete. If a project manager leaves it unchanged while costs climb, the job looks further along and more profitable than it is. That is why a good WIP process treats the cost-to-complete review as the real work of the month, not a formality.

A useful check is to ask the project manager for their own read of percent complete and compare it to the cost-derived number. A large gap usually means one of two things: costs have not been captured yet, or the job is running over. Either way, it is worth a conversation before the numbers go out.

When you have billed more than you have earned, the job is overbilled, and the difference is a liability on your balance sheet. When you have earned more than you have billed, it is underbilled, and the difference is an asset.

Neither is automatically good or bad, but the pattern matters. Modest overbilling is normal for a contractor who bills on a schedule of values. Growing underbilling on a job is one of the clearest warning signs a WIP can show. We cover both in more depth in overbilling and underbilling explained.

• Your surety, to decide how much work you can bond and at what size.
• Your bank, to support your line of credit and any covenants.
• Your CPA, as the basis for revenue recognition in your year-end statements.
• You, to see which jobs are actually making money while there is still time to act.

Each of them is reading the same schedule for a different reason. What they share is a need for it to be current, complete, and consistent with your balance sheet. See what makes a WIP schedule bonding-ready for what that looks like in practice.

Monthly. A WIP that is only built at year end is a reconstruction, and problems found in December are problems that ran for months. Updating it as part of a monthly close means the adjustment lands on your books every month and the owner can plan from current numbers.