How to build a WIP schedule
A WIP schedule is the difference between knowing a job is profitable and finding out it wasn’t, months after the cash already moved.
Why a WIP schedule matters
A work-in-progress (WIP) schedule reconciles what you have billed against what you have actually earned on percentage-of-completion contracts. Without it, a contractor can bill ahead of work performed (overbilling) or lag behind it (underbilling) for months without anyone noticing until cash gets tight or a bank or bonding agent asks for the report.
Where teams get it wrong
- Treating billings to date as equivalent to revenue earned.
- Updating the WIP schedule quarterly instead of monthly, so drift compounds.
- Not revising total estimated cost as change orders and cost overruns occur.
- Missing that overbilling is a liability (billings in excess of costs) and underbilling is an asset (costs in excess of billings) on the balance sheet.
- Building the WIP schedule from a different cost basis than the job costing system, so the two never reconcile.
The WIP Schedule Framework
- 1List every active percentage-of-completion contract with total contract value and total estimated cost.
- 2Record costs incurred to date for each contract from the job costing system.
- 3Calculate percent complete as costs incurred divided by total estimated cost.
- 4Calculate earned revenue as percent complete times total contract value.
- 5Compare earned revenue to billings to date to determine over- or underbilling.
- 6Update every line monthly, including revised estimated costs from change orders.
How Fintra builds the schedule for you
| Step | What Fintra does |
|---|---|
| List contracts | WIP schedules pull directly from active job costing records, no separate spreadsheet. |
| Costs incurred | Actual cost by cost code feeds the schedule automatically as it posts. |
| Percent complete | Percent complete calculates from costs incurred against total estimated cost, updated as costs post. |
| Earned revenue | Earned revenue is derived per contract from percent complete and contract value. |
| Over/underbilling | The schedule flags each contract as overbilled or underbilled against AIA-style progress billing. |
| Reconcile | WIP schedule totals reconcile to the general ledger every close. |
Over/underbilling
Over/(Under)billing = Billings to Date − (Percent Complete x Total Contract Value)
A positive result means the contract is overbilled - cash collected ahead of earned revenue; a negative result means it is underbilled, with revenue earned but not yet billed.
Your WIP schedule checklist
Set these up before your next bank or bonding review
- List every active percentage-of-completion contract with current estimated cost.
- Pull costs incurred directly from job costing, not a separate tally.
- Recalculate percent complete every period, not just at contract milestones.
- Update total estimated cost for every approved change order.
- Flag any contract more than 10% overbilled or underbilled for review.
- Reconcile WIP schedule totals to the general ledger every close.
- Share the schedule with your bank or bonding agent on the cadence they require.
Frequently asked questions
What is a WIP schedule in construction accounting?
A work-in-progress schedule reconciles billings to date against revenue actually earned on percentage-of-completion contracts. It reveals overbilling (billed ahead of work performed) and underbilling (work performed but not yet billed) at the contract level, which general financial statements do not show on their own.
How do you calculate percent complete for a WIP schedule?
The cost-to-cost method - the most common approach - divides costs incurred to date by total estimated cost for the contract. A contract with $300,000 spent against a $400,000 total estimate is 75% complete, which is then applied to total contract value to calculate earned revenue.
Is overbilling bad for a construction business?
It is not inherently bad, but it needs to be tracked as a liability, not treated as extra cash. A moderate, consistent level of overbilling across a job portfolio is normal cash-flow management; unmonitored or growing overbilling can mask jobs that are behind on real progress relative to what has already been collected.
How often should a WIP schedule be updated?
Monthly, aligned with your general close cycle, and immediately after any approved change order that shifts total estimated cost. A WIP schedule updated only quarterly can let over- or underbilling drift for months before anyone - including a bank or bonding agent - notices the gap.
Stay in the loop
One practical finance briefing a week - new guides, checklists, and benchmarks.
Keep your WIP schedule current every period
Fintra builds the WIP schedule from your live job costing data, reconciled to the ledger. Free to start, no card required.
Talk to us