WIP Reporting for Contractors: What Banks and Bonding Companies Need to See

What Is a WIP Report?

WIP stands for Work-in-Progress. A WIP report (also called a WIP schedule) is a financial document that shows the real-time status of every active construction project. For each project, it calculates:

Contract amount — the total contract value including approved change orders.

Estimated total cost — what you expect to spend to complete the job.

Costs to date — what you've actually spent so far.

Percent complete — costs to date divided by estimated total cost.

Earned revenue — contract amount multiplied by percent complete.

Billed to date — what you've actually invoiced.

Over/under billing — the difference between earned revenue and billed to date.

Why Banks and Bonding Companies Require WIP Reports

Bonding Capacity

Surety companies use your WIP schedule to determine how much additional work you can take on. They look at your total backlog, overbilling/underbilling position, and profit fade across active jobs. A clean WIP report can increase your bonding capacity. A missing or sloppy one limits it — or kills it entirely.

Construction Loans and Lines of Credit

Banks that lend to contractors want to see WIP reports alongside your financial statements. It tells them whether your reported revenue is real (backed by actual field progress) or inflated (overbilled). A WIP report that shows consistent underbilling is actually a positive signal — it means you have earned revenue you haven't collected yet.

Financial Accuracy

Without a WIP report, your income statement can be wildly misleading. A contractor who bills 80% of a $1M project but has only completed 50% of the work appears profitable — but $300K of that billed revenue hasn't been earned yet. The WIP report catches this.

How to Build a WIP Report

Step 1: List Every Active Project

Include the original contract amount, all approved change orders, and the current total contract value. Don't include unsigned change orders or proposals — only what's contractually agreed.

Step 2: Estimate Total Cost for Each Job

Use your original estimate plus any known cost changes. Update this estimate at least monthly. The accuracy of your WIP depends entirely on the accuracy of your cost estimates. If your estimates are stale, your WIP is fiction.

Step 3: Calculate Percent Complete

Divide actual costs to date by estimated total cost. A $200K job with $120K in costs to date is 60% complete. Some contractors use physical completion percentage instead of cost-based — either works, but be consistent and document your method.

Step 4: Compare Earned Revenue to Billings

Multiply contract amount by percent complete to get earned revenue. Compare to billed to date. If earned exceeds billed, you're underbilled. If billed exceeds earned, you're overbilled. Net the overbilled and underbilled amounts across all projects to get your total WIP position.

Step 5: Review Monthly and Update Estimates

WIP reports are only useful if they're current. Update cost estimates, change order amounts, and billing totals monthly. Review the WIP in your monthly financial meeting. This is where you catch profit fade — when a project's estimated total cost creeps up and your margin shrinks.

Common WIP Report Mistakes

Using stale cost estimates. If you haven't updated your estimated total cost since the bid, your percent complete is wrong and your WIP is useless.

Not including change orders. Approved change orders increase both your contract amount and your costs. Missing them distorts your WIP position.

Mixing cost-based and physical completion methods. Pick one method and use it consistently across all projects. Switching methods between projects makes the WIP schedule unreliable.

Not doing it at all. Many contractors wait until their CPA asks for a WIP at year-end. By then it's a backward-looking exercise. Monthly WIP reports are a forward-looking management tool — they show you which jobs are fading before the damage is done.