WIP Report in Construction: What It Shows and How to Build One
A WIP report shows each job's earned revenue, costs and over- or underbilling. Learn the columns, the math with worked examples, and how subs keep it accurate.
A WIP (work in progress) report is a job-by-job snapshot of your active contracts. It compares what you have spent, what you have billed and what you have actually earned, then projects the profit each job will finish with. For a subcontractor, it is the clearest early warning that a job is losing money or that you are living on cash you have not earned yet.
This guide covers what goes on the report, the math behind it with worked numbers, how to read the results, and how to keep the figures honest when your crews are spread across several jobs.
TL;DR
- A WIP report lists every open job with contract value, costs to date, estimated cost to complete, billings and earned revenue.
- Percent complete is costs to date divided by estimated total cost. Earned revenue is that percentage times the contract. Billings minus earned revenue is your over- or underbilling.
- Underbilling can signal a job that is losing money. Overbilling is cash you owe back in work, and it can hide a cash crunch.
- The report is only as good as the cost-to-complete estimate, which depends on timely field labor and change order data.
- Review it monthly with the people who run the jobs, not just the person who prepares it.
Table of Contents
- What a WIP report is
- Why subcontractors need one
- What goes on a WIP report
- How to calculate it: a worked example
- How to read the report
- How to build it each month
- Common mistakes that distort the picture
- Our perspective
- Getting the inputs right with Won2Build
- Turning the report into decisions
- FAQ
- Sources
What a WIP report is
In construction, WIP stands for work in progress. The report is a financial snapshot of all active projects that ties together costs incurred, billings to date, earned revenue and projected profit. It shows whether you are billing ahead of or behind the work actually performed.
You will see the same document under other names. A WIP report is also called a work-in-process, status-of-contracts or schedule-of-contracts report, and it is built on the contractor’s own estimates of uncompleted work. That last point matters: unlike a bank balance, a WIP report is a judgment. Two people can look at the same job and produce different numbers if they disagree on what is left to spend.
Who asks for it
You may be building it for yourself, but others will ask to see it. Sureties and lenders use it to judge how your jobs are performing. Markel’s surety form, for example, asks contractors to list all projects, bonded and non-bonded, with contract price including change orders, estimated total cost as last adjusted, billed to date and total cost to date. If you plan to grow your bonding capacity, the report you build for your own use should already look like that.
The Construction Financial Management Association describes WIP reports as essential financial communication tools that show a contractor’s stability through performance across many projects, not just current working capital. A healthy bank balance can sit on top of three jobs that are quietly losing money. The WIP report is where that shows up.
Why subcontractors need one
Subs live on thin margins and short billing cycles. You buy labor and material up front, bill monthly, and wait to be paid. Cash in the bank tells you little about whether a job is profitable. A WIP schedule helps you track each project’s trajectory, under- and overbillings, cash flow and gross profit, and it can reveal underbilling concerns, potential losses and the risk of spending overbilling cash on other projects.
The accounting logic is worth internalizing. A professional-insights article from the AICPA quotes a CPA making the point that revenue in construction comes from the percentage-of-completion calculation, not from sending a pay application, and that billing is merely a cash flow mechanism. In other words, sending a bigger invoice does not make you more profitable. Completing work for less than you estimated does.
There is also a scale effect. A construction finance advisor writing for subcontractors notes that as you grow, more concurrent jobs make it more likely that one goes off track unnoticed. Two jobs you can feel in your gut. Twelve you cannot.
What goes on a WIP report
The columns below cover what a subcontractor should include, based on the standard layout used in surety guidance. One row per job, one report per month-end.
| Column | What it means | Where the number comes from |
|---|---|---|
| WIP date | The cutoff date for the report | Your month-end close |
| Job name or number | Identifies the contract | Your job list |
| Total contract price | Original contract plus approved change orders | Contract and change order log |
| Costs to date | Labor, material, equipment and subcontract cost posted to the job | Job cost ledger, payroll, vendor bills |
| Estimated cost to complete | What you still expect to spend | Project manager and field input |
| Estimated total cost | Costs to date plus cost to complete | Calculated |
| Gross profit at bid | Profit you priced into the job | Your estimate |
| Percent complete | Costs to date divided by estimated total cost | Calculated |
| Earned revenue | Percent complete times contract price | Calculated |
| Billings to date | Total invoiced so far | Pay applications |
| Over/(under) billing | Billings minus earned revenue | Calculated |
Two extras are worth adding: estimated gross profit at completion and gross profit earned to date. Putting the bid margin next to the current projected margin makes margin fade visible at a glance.
Include pending change orders carefully
The contract column should include approved change orders. Pending ones are where the arguments start. Effective WIP reviews include project changes, including pending change orders, in the monthly discussion between finance, project management and estimating. A practical rule: costs from extra work you have already performed go into costs to date, so if the matching change order is not approved and not in contract value, your percent complete and margin will look worse than reality, or you will carry a hidden receivable. Flag those jobs rather than guessing quietly.
How to calculate it: a worked example
The method is percentage of completion, cost to cost. Three steps:
- Percent complete = costs to date ÷ estimated total cost
- Earned revenue = percent complete × total contract price
- Over/(under) billing = billings to date − earned revenue
Here is an example with illustrative numbers for a mechanical sub. The job started at a $380,000 contract and picked up a $20,000 approved change order.
| Item | Amount |
|---|---|
| Total contract price | $400,000 |
| Estimated total cost | $320,000 |
| Costs to date | $192,000 |
| Billings to date | $270,000 |
- Percent complete: $192,000 ÷ $320,000 = 60%
- Earned revenue: 60% × $400,000 = $240,000
- Overbilling: $270,000 − $240,000 = $30,000
- Gross profit at bid: $400,000 − $320,000 = $80,000, or 20%
- Gross profit earned to date: $240,000 − $192,000 = $48,000
This job is overbilled by $30,000. You have collected, or are owed, $30,000 more than you have earned. That is not profit. It is a contract liability, and it can lead to negative cash flow as you catch up to what has been billed.
Now a second job, this time underbilled:
| Item | Amount |
|---|---|
| Total contract price | $250,000 |
| Estimated total cost | $200,000 |
| Costs to date | $150,000 |
| Billings to date | $160,000 |
- Percent complete: $150,000 ÷ $200,000 = 75%
- Earned revenue: 75% × $250,000 = $187,500
- Underbilling: $160,000 − $187,500 = −$27,500
You have earned $27,500 you have not yet invoiced. Sometimes that is just timing, such as a pay app that has not gone out. Underbilling is a cause for concern when it suggests you are not making as much as expected or are losing money on the job, so find out which it is.
What margin fade looks like
Suppose the second job’s estimated total cost rises from $200,000 to $230,000 because rework ate field hours. Costs to date stay at $150,000.
- Percent complete drops to about 65.2% ($150,000 ÷ $230,000)
- Earned revenue drops to about $163,043
- Projected gross profit falls from $50,000 (20%) to $20,000 (8%)
The job did not get a dollar more expensive to date. Your estimate of the finish did. That is the point of the report: it forces you to say out loud what the job will cost, while there is still time to act. Managers can use these figures to assess project performance and margin fade.
How to read the report
Start with the bottom line, then go job by job.
Check total over- and underbilling
A large net overbilling position means you are funding other work, or payroll, with money tied to future costs. A large net underbilling position means you are financing the owner or the GC, and your cash will be stretched even if the jobs are profitable.
Compare projected margin to bid margin
Sort by the gap between gross profit at bid and current estimated gross profit. Anything that has slipped by several points deserves a conversation with the project manager this week, not at the next quarter close.
Look for jobs that never change
If a job’s estimated cost to complete is identical month after month while costs keep posting, nobody is updating it. Unreliable WIP reporting can make financial statements show profits that do not exist and hide losses until completion. A frozen estimate is the usual cause.
Watch jobs near the end
A job at 95% complete with a dropping margin is a warning that the remaining 5% is being underestimated, or that closeout costs were never in the number.
How to build it each month
The process is simple. The discipline is the hard part.
- Close job costs. Post payroll, material, equipment and subcontract costs through the cutoff date. Late timesheets are the most common leak.
- Update contract values. Add approved change orders, and list pending ones separately.
- Get a fresh cost-to-complete from each project manager. Not the original budget minus costs. A forward-looking estimate of what is left.
- Enter billings to date from your pay applications.
- Calculate percent complete, earned revenue and over/under billing.
- Review it in a meeting. Review each job monthly with project managers, discussing estimated costs, contract amount, billings, costs and over- or underbillings.
- Cross-check. WIP schedules are commonly updated monthly, and the numbers should be crosschecked against other financial statements, such as your balance sheet and income statement.
Contractors should also collaborate with project teams, share timely data and evaluate the cost to finish the project. The finance person cannot know that the electrical rough-in is running two weeks long. The foreman can.
Common mistakes that distort the picture
Stale cost-to-complete estimates. Estimated cost to complete should rely on real-time project management and field reporting. Otherwise it and the estimated total cost may be inaccurate, and a problem is discovered too late.
Missing or late labor. If last week’s hours are not in the system at cutoff, costs to date are understated, percent complete is understated, and the job looks healthier than it is. Our own look at fixing construction time tracking covers how to get hours in the same week they are worked.
Change orders in limbo. Work done on a verbal go-ahead shows up as cost with no revenue. See our explanation of commercial progress billing for how the pay app and change order log should line up.
Spreadsheet errors. The CFMA points out that human error is a major risk in spreadsheet-based WIP reporting, noting that nearly 9 out of 10 spreadsheets contain some form of error. One broken formula copied down a column can misstate every job. If you are ready to move off sheets, our pilot plan for replacing construction spreadsheets lays out a low-risk way to start.
Optimistic bids baked in. If the estimate was thin, the report will show fade early. A good estimate is the foundation of a good WIP. See our guide to estimating accuracy for how to check yours.
No budget baseline. You cannot measure fade without a clean job budget. Our walkthrough on setting up project budget tracking covers how to build one.
Our perspective
We built Won2Build from the subcontractor’s side of the table, and the pattern we see is consistent: the WIP report is rarely wrong because of the math. It is wrong because of the inputs. Hours arrive on Friday for the week ending Sunday. Extra work is done in the field and priced three weeks later. The estimate lives in one spreadsheet, the budget in another, and the time data in a third.
When the field and the office are working from different numbers, the monthly WIP becomes an exercise in reconciling them, and by then the information is old. Our view is that the fix is upstream. Capture labor by job and cost code as it happens, log every change order and T&M ticket the day the work is directed, and keep the original bid quantities and budget connected to the job. Then the cost-to-complete conversation is about the work remaining, not about whose numbers are right.
A WIP report is a scoreboard. The way to change the score is to change what happens on the job in the week, not to polish the report on the 5th.
— Jen Reese
Getting the inputs right with Won2Build
A WIP report needs three clean feeds: labor and job cost, contract changes, and the original estimate. Won2Build Hub puts tools for each behind one login. Time Budge handles labor tracking and job cost from the field, CO Hub handles change orders and T&M tickets, and Bid Track manages estimates and the bid pipeline. Takeoff and the Hub itself are listed at $0 per month.
Published pricing, per the pricing page: Time Budge is $199 per month per company, Bid Track is $199 per month per company, CO Hub is $59 per month per company, and there is a $2 per month fee per active field worker. You can also see how the pieces fit in our overview of construction software for subcontractors, or start from the Won2Build Hub.
Turning the report into decisions
A WIP report earns its keep when it changes something. A few habits help:
- Set a margin-fade trigger. For example, any job whose projected margin falls several points below bid gets a written recovery plan. Choose a threshold that fits your trade and typical margins.
- Compare billing to work in place. If you are underbilled on a profitable job, bill sooner. If you are overbilled, make sure the cash is not already spent.
- Use it for bidding. Jobs that faded show where your estimates run light: a trade, a type of owner, a phase. Feed that back into your estimating practices.
- Share a field version. A one-page job summary for foremen, in the spirit of our subcontractor project reports, helps crews see the same numbers the office sees.
FAQ
What does WIP stand for in construction?
WIP stands for work in progress. It refers to the value of projects that are underway but not complete, and the WIP report summarizes the costs, billings, earned revenue and projected profit on each of those jobs.
What does a WIP report look like?
It is usually a table with one row per active job. Columns show contract value including change orders, costs to date, estimated cost to complete, percent complete, earned revenue, billings to date and the over- or underbilling amount. Sureties publish their own forms, such as this status-of-contracts layout, which are a good model.
How often should I update a WIP report?
Monthly is the common practice, tied to your month-end close. Update it before the review meeting so project managers are discussing current numbers, and cross-check it against your financial statements each time.
Is overbilling good or bad?
Neither by itself. Overbilling improves cash on hand, but it is a liability for work you still owe. It becomes a problem when the extra cash is spent on other jobs or overhead and the remaining work costs more than expected.
Can I use a spreadsheet for my WIP report?
Yes, many subs start there. The risk is formula and data-entry error, and the delay in getting field costs into the file. Keep one controlled template, lock formulas, and reconcile to your accounting system every month.
Sources
- What Is a WIP Report in Construction?
- Contractor Work In Progress Report: A Surety Deep Dive
- Instructions for completing the Work in Progress / Status of Contracts report
- Automation: The Secret Ingredient to Elevate Your WIP (CFMA)
- How to Analyze WIP Schedules
- WIP schedules: Blueprints for solid construction accounting (AICPA)
- Bad WIP Reporting Hides Losses Until It’s Too Late
- Work-in-Progress in Construction (CFMA)
- 5 Tips for More Accurate Construction Work-in-Progress Reports (CFMA)
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