Work in Progress (WIP) Reporting Procedure
Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Project Managers, Accounting, Executives
Purpose
Establish procedures for accurate WIP reporting to track project profitability and recognize revenue properly.
What is WIP?
Work in Progress (WIP) is a financial report that:
- Tracks each project's profitability
- Calculates over/under billings
- Recognizes revenue properly
- Required for percentage of completion accounting
WIP Report Components
For Each Project:
| Field | Description |
|---|---|
| Contract Value | Current contract + approved COs |
| Estimated Cost | Total cost to complete project |
| Cost to Date | Actual costs incurred |
| % Complete | Cost to date ÷ Estimated cost |
| Earned Revenue | Contract × % complete |
| Billed to Date | Amount invoiced |
| Over/Under | Earned revenue - billed |
| Projected Profit | Contract - estimated cost |
| Projected Margin | Profit ÷ contract |
Percentage Complete Calculation
Cost-to-Cost Method (Most Common):
Costs Incurred to Date
% Complete = ────────────────────────────────
Total Estimated Costs
Example:
- Estimated total cost: $800,000
- Costs to date: $400,000
- % Complete: 50%
Over/Under Billing
Over-Billed:
- Billed more than earned
- Liability on balance sheet
- Cash received ahead of work
- Must "earn" this in future
Under-Billed:
- Billed less than earned
- Asset on balance sheet
- Work ahead of billing
- Collect through future billings
Formula:
Over/Under = Earned Revenue - Billed to Date
Positive = Under-billed (asset)
Negative = Over-billed (liability)
WIP Report Format
================================================================
WORK IN PROGRESS REPORT
================================================================
Period Ending: ______________________________________________
================================================================
| Project | Contract | Est Cost | Cost TD | % Comp | Earned | Billed | Over/(Under) | Est Profit | Margin |
|---------|----------|----------|---------|--------|--------|--------|--------------|------------|--------|
| PRJ-001 | | | | | | | | | |
| PRJ-002 | | | | | | | | | |
| PRJ-003 | | | | | | | | | |
| TOTAL | | | | | | | | | |
================================================================
SUMMARY:
Total Over-Billed: $____________________
Total Under-Billed: $____________________
Net Over/(Under): $____________________
Total Estimated Profit (Open Jobs): $____________________
Average Margin: ________%
================================================================
Reviewed By: _______________________ Date: _________________
================================================================
WIP Review Process
Monthly Steps:
Step 1: Update Contract Values
- Add approved change orders
- Verify current contract value
- Include pending (if appropriate)
Step 2: Update Costs to Date
- All costs posted
- Accruals for unbilled work
- Committed costs included
Step 3: Update Estimated Costs
- Review original estimate
- Adjust for changes
- Include costs to complete
- Update projections
Step 4: Calculate Percentages
- % complete calculated
- Revenue recognized
- Over/under calculated
Step 5: PM Review
- Each PM reviews their projects
- Estimates realistic
- Issues identified
Step 6: Management Review
- Overall review
- Problem projects discussed
- Adjustments approved
Fade Analysis
Tracking Profit Changes:
| Month | Est. Profit | Change | Reason |
|---|---|---|---|
| Jan | $100,000 | - | Original |
| Feb | $95,000 | ($5,000) | Material increase |
| Mar | $90,000 | ($5,000) | Extra labor |
| Apr | $85,000 | ($5,000) | Change order (pending) |
Fade Flags:
- Consecutive profit decreases
- Significant single-month drops
- Margin below company average
Estimate to Complete (ETC)
Review Regularly:
Questions to Ask:
- What work remains?
- Are there cost overruns?
- Pending change orders?
- Productivity issues?
- Material price changes?
- Schedule impacts?
Update ETC When:
- Monthly (at minimum)
- After significant events
- When issues arise
- Quarterly deep dive
Common WIP Issues
| Issue | Cause | Solution |
|---|---|---|
| % complete jumps | Delayed cost posting | Post timely |
| Profit fades | Poor estimate updates | Review estimates monthly |
| Large under-billing | Slow billing | Bill promptly |
| Large over-billing | Front-loaded SOV | Review SOV setup |
| Negative profit | Job problems | Early intervention |
Job Profitability Review
Green Flags:
- On budget or better
- Consistent profit estimates
- Under-billed (slightly)
- On schedule
Yellow Flags:
- Profit fading
- Over-billed significantly
- Behind schedule
- Change orders pending
Red Flags:
- Negative profit projected
- Large, unexplained changes
- Significant fade
- No recent estimate review
Software Integration
BLDR Pro:
- Cost tracking
- % complete calculation
- Job cost reporting
- WIP report generation
Related Documents
- Job Cost Reporting
- Pay Application Process
- Change Order Management
- Monthly Close Process
Template provided by support.construction. Critical for construction financial management.