WIP Schedules Explained for Contractors

A work-in-progress (WIP) schedule is a report showing every open job with its contract value, costs incurred to date, estimated cost to complete, percentage complete, revenue earned, and amount billed. It reveals whether each job is overbilled or underbilled, and it is the report bonding companies and lenders ask for first.

Key Takeaways

A WIP schedule turns a pile of open jobs into one page that shows where the money actually is.
Overbilling looks like cash today and is a liability, not profit.
Underbilling means you have earned revenue you have not invoiced – it is working capital sitting in the field.
Sureties and lenders generally expect a WIP schedule with financial statements. Not having one limits bonding capacity.
A WIP schedule is only as good as the cost-to-complete estimates feeding it.

What Is Percentage of Completion?

Percentage of completion recognizes revenue on a long-term contract as the work is performed, rather than when the job finishes. The common method is cost-to-cost: costs incurred to date divided by total estimated costs.

Under FASB ASC 606, revenue is recognized as performance obligations are satisfied, and for most construction contracts that satisfaction occurs over time. The practical effect for contractors is the familiar one: earn revenue as you build, not when you invoice.

What Are Over and Under Billings?

Once you know revenue earned and amount billed, the difference is one of two things:

Overbilling (billings in excess of costs and earned income) – you have invoiced more than you have earned. It is a liability on the balance sheet. The cash is real; the profit is not yet.
Underbilling (costs and earned income in excess of billings) – you have earned more than you have invoiced. It is an asset, and it means you are financing the job out of your own working capital.

Consistent underbilling is a cash flow problem hiding in plain sight. Consistent heavy overbilling can mask a job going backwards, because the cash keeps arriving while the margin erodes.

What Goes on a WIP Schedule?

Per open job, at minimum:

Original contract amount plus approved change orders
Total estimated cost at completion
Costs incurred to date
Percentage complete
Revenue earned to date
Amount billed to date
Over or under billing
Estimated gross profit and margin

Why Does My Bonding Company Want This?

A surety is underwriting your ability to finish the work. The WIP schedule tells them your backlog, whether your jobs are trending to margin, whether you are financing work out of pocket, and whether your estimating is reliable. A contractor with clean, consistent WIP reporting is a materially easier underwriting decision, and bonding capacity tends to follow.

What We Do

Build a WIP schedule from your existing job cost data
Establish a monthly cost-to-complete review with your PMs so estimates stay honest
Post the WIP adjusting entries so the financial statements reflect percentage of completion
Reconcile the WIP schedule to the general ledger
Prepare the WIP package your surety, lender, or CPA asks for

Frequently Asked Questions About WIP Schedules

What is a WIP schedule in construction?

A WIP schedule is a report listing every open contract with its contract value, estimated total cost, costs to date, percentage complete, revenue earned, amount billed, and the resulting over or under billing. It shows the financial position of work in progress at a point in time.

How is percentage of completion calculated?

The most common approach is cost-to-cost: divide costs incurred to date by the total estimated cost at completion. That percentage is applied to the contract value to determine revenue earned to date. The method depends on reliable cost-to-complete estimates.

What is the difference between overbilling and underbilling?

Overbilling means you have invoiced more than you have earned on a job, and it is recorded as a liability. Underbilling means you have earned more than you have invoiced, and it is recorded as an asset. Overbilling brings cash forward; underbilling means you are funding the work yourself.

How often should a WIP schedule be updated?

Monthly is standard. It should be updated alongside the month-end close, with cost-to-complete estimates refreshed by whoever is actually running the job, not by the accounting file alone.

Do small contractors need a WIP schedule?

If you run jobs that span more than one month, yes. It is the only report that shows whether an open job is on margin while there is still time to act, and it is generally required once you seek bonding or bank financing.

Get a WIP Schedule You Can Hand to Anyone

If your surety, lender, or CPA has asked for a WIP schedule and you have been assembling it in a spreadsheet the night before, that is a fixable problem.