Construction WIP Schedule (Over and Under Billings)

About the Construction WIP Schedule (Over and Under Billings)

A work-in-progress (WIP) schedule shows, for every open job, how much of the contract you have earned and whether your billings are ahead of the work or behind it. Banks and surety companies ask for it with your financial statements, because it is where profit fade, unbilled work and loss jobs show first.

Type or import your jobs: the contract value (with approved change orders), the latest estimated total cost, the cost to date and what you have billed to date. The schedule works out each job's percent complete by the cost-to-cost method, the earned revenue, the gross profit to date and the over or under billing, totals them, and flags loss jobs, costs over the estimate, under-billed jobs and margins that have faded against the bid (or your last schedule) by more than the points you set.

Without a pass the schedule is a free preview: the schedule totals and the first jobs (up to 10) with their figures. The other jobs, their flags and the Excel, PDF and CSV files unlock with a Premium pass. Everything is worked out in your browser; nothing is uploaded.

Common uses

• A contractor preparing the WIP schedule for the year-end or quarterly statements that a bank or surety asks for.
• A construction accountant reviewing over and under billings before closing the month.
• A project manager seeing which jobs have faded since the bid and which need a bill sent.
• An owner checking how much of the backlog is profit before taking on more work.

How the schedule is worked out

• Percent complete = cost to date ÷ estimated total cost (the cost-to-cost method), held at 100% when costs run past the estimate.
• Earned revenue = percent complete × contract value.
• Gross profit to date = earned revenue − cost to date.
• Over (under) billing = billed to date − earned revenue. A positive amount is billings in excess of costs and estimated earnings (a liability: you have billed ahead of the work); a negative amount is costs and estimated earnings in excess of billings (an asset: work done and not yet billed).
• Cost to complete = estimated total cost − cost to date; backlog = contract value − earned revenue.
• Loss jobs: when the estimated total cost is above the contract value, the whole expected loss is recognised at once; the loss provision is the part of it that the gross loss to date does not show yet, (1 − percent complete) × expected loss.

The cost-to-cost comparison is the one US tax law prescribes for the percentage of completion method of long-term contracts (26 U.S.C. § 460; the completion factor of 26 CFR § 1.460-4 compares contract costs incurred with estimated total contract costs). Under IFRS 15 revenue over time follows a measure of progress, of which costs incurred is one, and under IAS 37 an onerous contract gives rise to a provision.

What the flags mean

• Loss job: the estimate at completion is above the contract value. Book the whole expected loss and review the estimate.
• Cost over estimate: cost to date is already above the estimated total cost; the estimate to complete is out of date.
• Fading margin: the estimated margin is below the bid margin (or the margin on your last schedule) by at least the points you set. Find the costs that grew and the change orders not yet signed.
• Under-billed: unbilled earned revenue above the share of the contract you set. Bill the work, or check whether costs were posted to the wrong job.
• Billed above contract, final bill due and billed before cost point to change orders, retention and posting to look at.

Why lenders and sureties read it closely

Under-billings are revenue you have earned on paper but not invoiced, so they depend on the cost estimates being right; a schedule with large or growing under-billings, or margins that fade from one schedule to the next, is the usual first sign of a job in trouble. Over-billings are cash collected ahead of the work and are owed back as work: they finance the job while it lasts. Comparing each schedule with the last one, job by job, shows the trend.

Limitations

• It uses the cost-to-cost method only. Jobs measured by units completed, surveys or milestones need a percent complete from those measures.
• Retention, uninstalled materials and costs that are not progress (mobilisation paid ahead, materials stored on site) are not separated: leave them out of the cost to date where your accountant does.
• Contracts, estimates and billings are your figures; the schedule cannot check them against your books.
• Up to 500 jobs in one schedule. Amounts are rounded to cents job by job and the totals add the rounded amounts.
• An estimate for planning and review, not an audited statement, tax advice or a substitute for your accountant’s work.

Privacy

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