A work-in-progress (WIP) schedule is a one-page table of every open job, showing contract value, estimated total cost, cost to date, percent complete, revenue earned, amount billed, and the difference between earned and billed. That last column, overbilling or underbilling, tells you whether your cash position is flattering you or hiding a problem. The change in each job's projected margin from month to month, called fade or gain, tells you whether your estimates are holding up.
If you do commercial, institutional or larger residential project work, it is the most useful report in your business after the bank balance. This guide explains how to read one. Preparing it, and the accounting method behind it, belongs to your accountant.
The columns and what they mean
Most WIP schedules for contractors use the cost-to-cost method: a job is as complete as the share of its estimated total cost already spent.
| Column | What it means |
|---|---|
| Contract value | Original contract plus approved change orders |
| Estimated total cost | Cost to date plus the project manager's estimate of cost to complete |
| Projected gross profit | Contract value minus estimated total cost |
| Cost to date | Labour, material, equipment and subcontract costs posted so far |
| Percent complete | Cost to date ÷ estimated total cost |
| Earned revenue | Contract value × percent complete |
| Billed to date | Progress invoices issued so far |
| Over/(under) billed | Billed to date minus earned revenue |
The quality of the whole schedule rests on one number: the estimate of cost to complete. If project managers are optimistic, every other column is wrong.
A worked example with three jobs
Here is a simplified schedule for a firm with three open jobs at month end. The numbers are illustrative.
| Job A | Job B | Job C | |
|---|---|---|---|
| Contract value | $480,000 | $200,000 | $90,000 |
| Estimated total cost | $374,400 | $160,000 | $81,000 |
| Projected gross profit | $105,600 (22%) | $40,000 (20%) | $9,000 (10%) |
| Cost to date | $187,200 | $120,000 | $40,500 |
| Percent complete | 50% | 75% | 50% |
| Earned revenue | $240,000 | $150,000 | $45,000 |
| Billed to date | $270,000 | $130,000 | $45,000 |
| Over/(under) billed | $30,000 over | $20,000 under | 0 |
Each job is telling a different story.
Job A: overbilled
You have billed $30,000 more than the work earned. That is common when a schedule of values front-loads mobilisation and equipment. It is cash in your account that you have not earned yet. The danger is treating it as profit: spend it, and you will be short when the remaining work has to be paid for. A firm with large overbillings across several jobs can look cash-rich and be nothing of the kind.
Job B: underbilled
The work has earned $150,000 but you have only billed $130,000. You are financing your customer by $20,000. Sometimes that is just timing, because the next progress claim is about to go out. Sometimes it means work was done that cannot be billed: unsigned extras, a dispute or a missed billing milestone. Persistent underbilling is one of the clearest warning signs on a WIP schedule, and it is worth asking the project manager about every month.
Job C: fading
Job C was bid at a 22% margin. Its estimated cost was $70,200. This month the project manager has raised the estimated total cost to $81,000, so the projected margin has fallen to 10%. That 12-point drop is fade, worth about $10,800 of gross profit. The schedule does not tell you why; it tells you to ask. Typical causes are labour productivity, material price changes, rework and work done outside scope without a change order.
Fade and gain over time
Reading one month's schedule is useful. Reading the trend is better. For each job, track the projected margin at bid, then at every month end until close.
- A job that fades steadily usually has a productivity or scope problem that nobody has fixed.
- A job that holds its margin and then drops at the end usually had an optimistic cost-to-complete estimate. The problem was there all along; it just was not reported.
- A job that gains may be a genuine win, or a project manager holding contingency back. Both are worth understanding.
Across all your closed jobs, the average difference between bid margin and final margin is one of the most honest measures of your estimating. If it is consistently negative, your bids are too thin or your field execution is weaker than your estimates assume. Our job costing service works on exactly that gap.
Questions to ask at every monthly review
- Which jobs changed projected margin by more than two points since last month, and why?
- Which jobs are underbilled, and what is stopping the next invoice?
- Is total overbilling higher than our cash on hand? If so, how much of our cash is really ours?
- Are the cost-to-complete estimates based on remaining hours and quantities, or on the budget minus what has been spent?
- Are there unpriced or unsigned change orders sitting on any job?
- How does this month's total projected gross profit compare with the overhead we need to cover this year?
That last question links the WIP schedule to your overhead budget and selling rate. If projected gross profit across your open and expected jobs does not cover a year of overhead, you know months in advance that the year will disappoint.
Common mistakes owners make with WIP
- Not having one. Firms that only look at the income statement see job problems a year late.
- Accepting "budget minus spent" as cost to complete. That assumes the rest of the job will go exactly to plan. Ask for remaining hours.
- Ignoring small jobs. Ten small jobs fading by a few thousand dollars each can do as much damage as one big one.
- Spending overbillings. Keep an eye on the ratio of overbillings to cash.
- Treating it as an accounting chore. The WIP schedule is an operating tool. The owner and project managers should read it, not just the bookkeeper.
Why it matters for growth and for exit
Banks and bonding companies look at your WIP schedule to decide how much risk you can carry. A clean, accurate one that matches your financial statements makes it easier to take on larger work. When the time comes to sell, a buyer will read several years of them to judge whether your reported profit is real. Steady, accurate schedules support a better conversation; schedules that swing wildly at year end raise questions. The exit planning page explains how we prepare for that review.
If you want to set up a monthly review routine around your WIP schedule, see job costing and project margins or return to the guides.
Frequently asked questions
Who should prepare our WIP schedule?
Your accountant, controller or bookkeeper, using estimates of cost to complete from your project managers. We do not prepare financial statements. We help owners read the schedule and connect it to weekly job reviews.
Is overbilling bad?
Not in itself. Modest overbilling is normal and helps cash flow. The risk is spending that cash as if it were profit, or overbilling hiding a job whose costs are running away.
Why does my banker or surety ask for it?
Because it shows whether your reported profit is real and whether your open jobs are healthy. Lenders and bonding companies rely on it to judge risk, so an inaccurate one costs you credibility.
How often should it be updated?
Monthly at minimum for firms with project work. Quarterly is too slow to catch a fading job in time.