CONSTRUCTION WIP SCHEDULE EXPLAINED.
A WIP schedule (work-in-progress schedule) reconciles what you've billed on each project against what you've actually earned based on percent complete. When you've billed more than you've earned, you're overbilled — which looks like profit but creates a liability at closeout. When you've earned more than you've billed, you're underbilled — which explains why cash is low even though the job is on track. Every commercial subcontractor should run one monthly.
Most subcontractors don't have a WIP schedule. They have a P&L that may show healthy revenue and a bank account that tells a different story. The WIP schedule is the document that bridges those two realities — it shows the real financial position of every active project at any given moment, regardless of what's been billed or collected. Bonding companies require it. Banks look for it. The ones who skip it are making financial decisions with incomplete information every single month.
WHAT A WIP SCHEDULE ACTUALLY IS.
A WIP schedule — work-in-progress schedule — is a project-by-project financial reconciliation that answers one question for each active job: have you billed the right amount relative to how much of the work is actually done?
It has five columns that matter:
1. REVISED CONTRACT VALUE — The current contract amount including all approved change orders. Not the original contract — the current one.
2. PERCENT COMPLETE — How far through the job you actually are, measured by cost incurred vs total estimated cost. Not schedule. Not gut feel. Cost-based percent complete.
3. EARNED REVENUE — Contract value × percent complete. What you've actually earned, regardless of what you've billed.
4. BILLED TO DATE — What you've actually invoiced the GC or owner on this project.
5. OVER/UNDERBILLED — Earned revenue minus billed to date. Positive = underbilled (you've earned more than you've invoiced). Negative = overbilled (you've invoiced more than you've earned).
OVERBILLING VS UNDERBILLING — WHY BOTH ARE PROBLEMS.
You've Billed More Than You've Earned
This is the more dangerous condition. When you bill ahead of work performed — common with front-loaded SOVs — you're holding money that belongs to future work. On paper it looks like profit. In reality it's a liability. If the job runs over, gets cancelled, or if the GC demands a credit at closeout, that overbilled amount has to come back. Overbilling that isn't tracked becomes phantom profit that gets spent — and creates a cash crisis at closeout when the reconciliation happens.
You've Earned More Than You've Billed
This is the more common condition and the one that explains the "profitable but no cash" problem. You're 60% done with a $500K project but you've only billed 40% — $200K. That $100K gap is money you've earned and haven't collected. It shows up as an asset on the balance sheet (a receivable) but it's not in the bank. If multiple projects are simultaneously underbilled, the total can easily exceed $300K–$400K — which is why the bank account doesn't match what the business is supposed to be making.
The real-world number: On a $5M subcontractor running 6 active projects, it's common to find $150K–$350K in cumulative underbilling sitting as earned-but-not-billed. That's money the company has already done the work for — it just hasn't been invoiced yet. A monthly WIP makes it visible and forces the billing catch-up.
WHAT A WIP SCHEDULE LOOKS LIKE IN PRACTICE.
Three active projects. Here's what the WIP shows:
| Project | Contract Value | % Complete | Earned Revenue | Billed to Date | Over / (Under) |
|---|---|---|---|---|---|
| Sanitary Sewer — Phase 2 | $620,000 | 72% | $446,400 | $496,000 | ($49,600) OVER |
| Commercial Sitework — Lot 4 | $385,000 | 45% | $173,250 | $115,500 | $57,750 UNDER |
| Utility Relocation — Phase 1 | $290,000 | 88% | $255,200 | $203,000 | $52,200 UNDER |
What this tells you: Project 1 is overbilled by $49,600 — that's a liability to watch. Projects 2 and 3 together have $109,950 in earned-but-not-billed work. That's cash sitting on the table. The next pay app cycle should be capturing that entire amount. Without the WIP, none of this is visible — it all just looks like "revenue" and "billing."
THE MONTHLY WIP PROCESS — WHAT IT TAKES.
WIP AND BONDING — THE CONNECTION MOST CONTRACTORS MISS.
Surety agents require a current WIP schedule for any bonding increase. Banks want it before extending a line of credit. The reason: a WIP schedule is the only document that shows the real financial position of a construction business — because the P&L can look healthy while the WIP shows three jobs heading for losses.
Contractors who run a clean monthly WIP get bonding capacity increases faster. They get LOC approvals with less friction. They get better terms from lenders because the lender can see what's actually happening in the business — not just what the P&L says happened last quarter.
A marine GC we worked with had four accounting staff, no job costing, and no WIP schedule. When we built the system and produced 9 months of clean documented profitability, the business valuation went from $2.3M to $5.5M — same revenue, same crews, same work. The WIP was part of what made the financials credible to a buyer.
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