WIP Schedules Explained: Why Your Surety and Bank Care More Than You Think

If you're a contractor with bonding, your WIP (Work-in-Progress) schedule is the most important financial document you produce. More important than your tax return. More important than your P&L. Here's why — and how to make sure yours is accurate.

What Is a WIP Schedule?

A WIP schedule compares two things for every active job:

1. Percent complete (based on costs incurred vs. estimated total cost)
2. Percent billed (based on billings to date vs. total contract value)

The difference between these two numbers tells you whether you're over-billing or under-billing on each job.

Why It Matters

Over-billing means you've billed more than you've earned. You've collected cash for work you haven't done yet. It looks good on your bank account but it's a liability — you owe that work to the GC.

Under-billing means you've done more work than you've billed for. You're financing the project out of your own pocket. This kills cash flow.

Your surety reviews your WIP to assess risk. A contractor who is consistently over-billing across all jobs is borrowing from the future — and that's a red flag for bonding capacity. A contractor who is consistently under-billing may have cash flow problems that threaten project completion.

How to Prepare a WIP Schedule

For each active job, you need:

The Three Biggest WIP Mistakes

1. Not Updating Cost Estimates

Your original estimate was $400K. You're 60% through the job and you've already spent $300K. Your revised estimate should be $500K — but if you never update it, your WIP shows you at 75% complete (300/400) when you're really at 60% (300/500). That's a $60K error in earned revenue.

2. Including Unapproved Change Orders

If the GC hasn't signed the change order, it doesn't go on your WIP. Period. Unapproved COs are contingent — they might become revenue, or they might not. Including them inflates your contract value and distorts your percent complete.

3. Preparing It Annually Instead of Monthly

A WIP schedule prepared once a year for your CPA is useless for management. By the time you see the over/under billing, the job is closed. Prepare it monthly. Review it with your PM team. Catch problems while you can still fix them.

What Your Surety Is Looking For

When your bonding company reviews your WIP, they're checking:

• Fade vs. growth: Are your jobs finishing at higher or lower cost than estimated? Consistent fade (jobs costing more than estimated) means your estimating is off.
• Over-billing concentration: Are you over-billed on most jobs? That's a liquidity risk.
• Aged jobs: Jobs that are 90%+ complete but still open often have unresolved issues (punch list, retention disputes, claims).
• Gross profit consistency: Are your margins holding from estimate to completion?

The Connection to Job Costing

Your WIP is only as good as your job cost data. If your costs aren't properly allocated to jobs — if materials are sitting in a generic "Materials" account without project assignment — your WIP will be wrong.

This is why proper job costing setup [blocked] is a prerequisite for accurate WIP reporting. You can't have one without the other.

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Get Your WIP Right

If you're not preparing a monthly WIP schedule, you're flying blind — and your surety knows it. A fractional controller can prepare and review your WIP monthly, catch over/under billing issues early, and keep your bonding company confident in your financial management.

Learn about our construction accounting services → [blocked]

Related reading:

• 7 Job Costing Mistakes Killing Your Margins → [blocked]
• Our fractional controller services → [blocked]
• Schedule a free Books Health Check →