What Is a WIP Schedule, and Why Does My Surety Care?

A Work in Progress (WIP) schedule is a monthly report that compares what you have billed on each open job with what you have actually earned, based on how much of the job is complete. Sureties and banks use it to judge whether your profits are real and whether your cash is about to run short. A clean, current WIP schedule is often the difference between a bonding line that grows with you and one that caps your growth.

What goes into a WIP schedule

For every open job, the schedule lists:

• Contract value, including approved change orders.
• Estimated total cost, updated as the job progresses.
• Cost to date, from job costing in your books.
• Percent complete, usually cost to date divided by estimated total cost.
• Earned revenue, which is contract value times percent complete.
• Billed to date, from your invoices or pay applications.
• Over- or under-billing, the gap between billed and earned.

Over-billing and under-billing, in plain English

Over-billed means you have invoiced more than you have earned. The cash feels good, but you owe that work, and the money is a liability on your balance sheet. Under-billed means you have earned more than you have invoiced. That is your money sitting uncollected, and sureties read large or growing under-billings as a warning that costs are running over or billing is falling behind.

Why it matters for bonding capacity

Surety underwriters set bonding limits based on your working capital, net worth and track record. The WIP schedule tells them whether the working capital on your balance sheet is real. Inaccurate estimates, missing change orders or job costs that are not posted on time all shrink the capacity a surety is willing to extend.

Five habits of contractors with clean WIP schedules

1. Job costs are posted weekly, not reconstructed at month-end.
2. Estimated total cost is re-forecast every month by the project manager.
3. Change orders are recorded as soon as they are approved.
4. Retainage is tracked by job, with a collection date for each.
5. The WIP schedule ties to the balance sheet every month.