WIP Reporting for Contractors
Work-in-Progress (WIP) reporting is the financial backbone of every construction company. Here's what you need to know to keep your projects—and your books—on track.
Quick Answer
WIP reporting compares costs incurred, revenue earned, and billings to date on each active construction project. It reveals whether you're over-billing or under-billing—and is required for GAAP compliance under ASC 606.
What Is WIP Reporting?
Work-in-Progress (WIP) reporting is a financial management process that compares costs incurred, revenue earned, and billings to date on each active construction project. It reveals whether you're over-billing or under-billing — and gives you the financial clarity to make informed decisions about your business.
Why WIP Reporting Matters
- Accurate revenue recognition: Prevents overstating or understating income on multi-phase projects.
- Cash flow visibility: Shows whether you're billing ahead of or behind the work you've completed.
- Bonding & lending: Sureties and banks require WIP schedules to evaluate your financial health.
- Tax compliance: Ensures you're reporting revenue correctly under the percentage-of-completion or completed-contract method.
How a WIP Report Works
A typical WIP report includes these columns for each active project:
| Column | Description |
|---|---|
| Contract Value | Total agreed price of the project |
| Estimated Total Cost | Total projected cost to complete |
| Costs to Date | Actual costs incurred so far |
| % Complete | Costs to Date ÷ Estimated Total Cost |
| Earned Revenue | Contract Value × % Complete |
| Billings to Date | Total invoiced so far |
| Over/Under Billed | Billings to Date − Earned Revenue |
Common WIP Mistakes
- Not updating cost estimates: Stale estimates make % complete meaningless.
- Ignoring change orders: Unapproved change orders distort contract values and margins.
- Mixing cash-basis and accrual: WIP only works on accrual-basis accounting.
- Quarterly-only reviews: Monthly WIP reviews catch problems before they compound.
GAAP Requirements
Under ASC 606 (Revenue from Contracts with Customers), contractors must recognize revenue based on progress toward satisfying performance obligations. For most construction contracts, this means using the percentage-of-completion method—which relies directly on accurate WIP data.
The completed-contract method is still permitted for certain short-duration contracts, but the IRS and bonding companies generally prefer percentage-of-completion for its transparency.
Getting Started with WIP
If you're not running WIP reports today, here's where to start:
- Set up job costing in your accounting software (QuickBooks, Sage, or Procore).
- Ensure every cost is coded to the correct job and cost category.
- Review and update estimated costs on each project monthly.
- Generate a WIP schedule at least monthly and review with your project managers.
- Share WIP reports with your CPA, bonding company, and bank as needed.
Or skip the learning curve entirely. At Scaffold, we build and maintain WIP schedules for construction companies every month. We set up your job costing structure, update cost estimates with your PMs, and deliver accurate WIP reports that your bonding company and CPA can rely on. You focus on building—we'll handle the numbers.
Sources & References
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