TLDR
A WIP schedule shows your cost position on every open job: how much you've earned based on percent complete versus how much you've spent. It tells you which jobs are overbilled, which are underbilled, and what your projected margin is across all active work. Your bonding company and bank use it to assess your financial health. Most specialty trade subs still build theirs manually in Excel.
- WIP Schedule
- A financial report listing all active construction jobs with their contract values, estimated costs, percent complete, earned revenue, actual costs, and over/underbilling position. Used for bonding, banking, and internal financial management.
DEFINITION
- Earned Revenue
- The contract value multiplied by percent complete. Represents the revenue a subcontractor has theoretically earned based on the work completed to date, regardless of what has actually been invoiced.
DEFINITION
- Overbilling
- When billed-to-date exceeds earned revenue. Indicates the sub has invoiced more than the value of work completed. Treated as a liability on the balance sheet.
DEFINITION
- Underbilling
- When earned revenue exceeds billed-to-date. Indicates the sub has completed more work than they've invoiced. Treated as a current asset on the balance sheet.
DEFINITION
- Percent Complete (Cost Method)
- Actual costs to date divided by estimated cost at completion. The most common method for calculating job completion percentage for specialty trade subs because it uses objective financial data.
DEFINITION
- Cost to Complete
- The estimated remaining cost to finish an open job. When added to actual costs to date, gives the projected total cost and allows calculation of projected final margin.
DEFINITION
Why the WIP Schedule Is the Most Important Financial Report a Specialty Trade Sub Can Produce
Your income statement tells you what happened last month. Your balance sheet tells you what you own and owe today. Neither tells you what’s happening on your open jobs right now.
The WIP schedule fills that gap. It shows your cost and billing position on every active job, in one document, at a point in time. If job #32 is overbilled by $45,000, you need to know that before your banker reviews your financials. If job #44 has a cost-to-complete that will result in a negative margin, you need to know that before the job closes.
Bonding companies require WIP schedules because the value of your financial statements depends on how your open jobs close. A company that looks profitable on a P&L but has $500,000 in overbillings on jobs that are trending over budget is in a different financial position than the income statement suggests.
The Excel WIP Problem
Most specialty trade subs who generate WIP schedules build them in Excel. The process: pull job costs from accounting software or QuickBooks, pull billing history from invoicing records, enter contract values and change orders manually, calculate percent complete using formulas, calculate earned revenue, compute over/underbilling, format for the bonding company.
That process takes 2–4 hours every month. It’s error-prone because data from multiple sources needs to be reconciled manually. And it produces a snapshot that becomes stale immediately, because any job costs or billing changes after the build date aren’t reflected.
The problem isn’t that the Excel WIP is wrong. It’s that the monthly rebuild is overhead that adds up, and the stale data means your WIP is always a lagging indicator rather than a current one.
How Job Costing Software Changes the WIP
When your job costing software tracks actual costs against estimates in real time and connects to your billing records, the WIP schedule is a report you run rather than a document you build. The data is current because it’s the same data you use for day-to-day cost tracking. Change orders update the contract value automatically when approved. Cost entries update percent complete as they happen.
For a specialty trade sub who submits WIP schedules to a bonding company quarterly, the difference between a 4-hour monthly rebuild and a 15-minute report run is significant over the course of a year. For a sub who wants to look at their WIP position weekly rather than monthly, the rebuild cost makes weekly WIP impractical without dedicated software.
The Change Order Accuracy Problem
The most common error in specialty trade sub WIP schedules is incomplete change order tracking. If a change order was approved but hasn’t been added to the contract value in your WIP, your earned revenue calculation is wrong. Your overbilling/underbilling analysis is wrong. Your projected margin is wrong.
The discipline of keeping approved change orders current in your WIP — whether you build it in Excel or generate it from software — is what makes the document accurate enough to present to a bonding company. A WIP schedule that doesn’t reflect approved change orders isn’t a WIP schedule your surety can rely on.
Like what you're reading?
Try MarginLock free for 30 days and take control of your job costs.
See plans & pricingQ&A
How do I build a WIP schedule as a specialty trade subcontractor?
For each open job, collect contract value (including approved change orders), estimated cost at completion, actual costs to date, and amount billed to date. Calculate percent complete using the cost method (actual costs ÷ estimated cost). Multiply contract value by percent complete to get earned revenue. Compare earned revenue to billed to date to get your over/underbilling position.
Q&A
What does my bonding company look for in a WIP schedule?
Bonding companies look for reasonable overbilling/underbilling ratios (large overbillings can signal cash flow problems), consistent projected margins across jobs (dramatic variation raises questions about your estimating accuracy), and no jobs that appear to be significantly over budget without explanation.
Want to learn more?
- Zero implementation fees
- Unlimited users
- Starts at $20/month
No credit card required.
Frequently asked