The WIP Schedule in Depth: Building, Reading & Defending It

Welcome

Hello, and welcome. This is Super Structures General Contractors — a national general contractor headquartered in Powhatan, Virginia — here to help you and your clients build something that lasts. We're glad you're with us, and we look forward to connecting with you.

Alright, The WIP Schedule in Depth: Building, Reading & Defending It. Don't let the plain title fool you. Here's the part that actually matters on the job: The WIP schedule is the one report that ties every job to the financial statements — build it monthly, read what it's telling you, and be ready to defend every line to your surety. Learn it well and your bonding capacity will follow.

The work-in-progress (WIP) schedule lists every open contract and reconciles job cost to the income statement and balance sheet. The Bookkeeping course introduced it; this lesson is how to build it, read it, and defend it.

The columns

For each job: contract value (with approved changes) · estimated total cost · estimated gross profit · cost to date · percent complete · earned revenue · billed to date · overbilled (billings > earned) · underbilled (earned > billings) · remaining to bill · remaining cost · backlog gross profit. Totals tie to the income statement (revenue and cost of revenue for the period) and the balance sheet (overbillings as a liability, underbillings as an asset).

Building it monthly

1. Lock cost to date from the job cost ledger after the cutoff.
2. Update every job's EAC from the ETC review.
3. Update contract value for approved changes only (pending changes disclosed separately).
4. Compute percent complete and earned revenue.
5. Enter billings to date from the invoice register.
6. Post the period's revenue adjustment and the over/under billing entries to the GL.
7. Reconcile: WIP totals = GL. Every time.

Reading it

• Overbillings are normal and healthy — you've billed ahead of cost (front-loaded schedule of values, stored materials). But they are a liability: cash you've collected for work not yet done. Big overbillings with low cash means that cash was spent elsewhere.
• Underbillings are a warning. Either billing is lagging (fix the pay app), costs are coded to the wrong job, work has been done that can't be billed (unapproved changes), or the EAC is understated. Sureties treat large or growing underbillings as a red flag.
• Fade shows as estimated gross profit falling job over job, month over month.

Going Deeper (Intermediate)

Build a completed-contracts schedule too: every job finished in the period, its original estimated margin, and its final margin. The surety compares the two to judge your forecasting. A pattern of final margins below the original tells them your WIP is optimistic.

Show pending change orders and claims in footnotes or separate columns with your assessment, so the reader sees the exposure and the upside without them being baked into the numbers.

Advanced / Pro-Level

Pros prepare the WIP as if the surety underwriter will question every line — because they will. They can explain each job's margin movement, each underbilling, and each late-stage job's ETC. They know the ratios the surety computes: underbillings as a percent of equity, backlog gross profit versus annual overhead, and working capital adjusted for retainage and underbillings. They also know that a CPA-reviewed or audited statement with a clean WIP is what unlocks higher bonding programs, and they treat the year-end WIP as the most important document the company produces.

Software matters here: an ERP that produces the WIP from the same job-cost data the PMs forecast in eliminates the spreadsheet reconciliations that break at month-end.

Practice Challenge

Job 2407: contract $2,500,000, EAC $2,200,000, cost to date $1,650,000, billed to date $1,500,000. Compute percent complete, earned revenue, and the over/under billing — and say what you'd ask the PM. (Answer: 75% complete; earned revenue $1,875,000; underbilled $375,000. Ask: why are billings $375,000 behind earned revenue? Is the pay app late or rejected, is there unapproved change-order work in cost, is cost from another job coded here, or is the EAC too low? Any of those needs fixing this month.)

In Practice

A contractor who hands the surety a monthly WIP that ties to the GL and explains every variance gets a bigger program. A contractor who produces the WIP once a year, in a hurry, gets a smaller one.

Common Mistakes to Avoid

• Preparing the WIP only at year-end
• WIP totals that don't tie to the general ledger
• Large underbillings left unexplained
• Treating overbillings as profit instead of as a liability

Takeaway: The WIP schedule is the one report that ties every job to the financial statements — build it monthly, read what it's telling you, and be ready to defend every line to your surety.

Educational content — not accounting, tax, or legal advice. Accounting methods and tax rules depend on your entity, your size, and your contracts; work with a CPA who knows construction.