Surety Bond WIP Schedule Requirements (Copy)

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TL;DR: Sureties require a current WIP schedule calculated from actual job costing data using the cost-to-cost method. The WIP must show overbilled and underbilled positions by job, projected final margin by job, and historical accuracy of WIP projections versus actual job closeouts. A contractor with 24 months of monthly WIP from ControlQore where projections have consistently matched actual closeouts within 5% will get higher bonding limits and lower collateral requirements than an otherwise identical contractor with no WIP history.

What Sureties Look For

The Four WIP Elements Sureties Evaluate

Element	What the Surety Wants to See	Red Flag
Calculation Method	Cost-to-cost from actual job costing data	Percentage complete estimated by owner or PM without cost data
Overbilled / Underbilled	Clearly disclosed by job with dollar amounts	Not disclosed or bundled into a single net position
Projected Final Margin	Updated from actual cost trajectory not original estimate	All jobs showing original estimate margin regardless of actual cost performance
Historical Accuracy	WIP projections within 5% of actual closeout margins	First WIP ever produced or produced from estimates rather than actual data

Building the Track Record

24 Months of WIP That Sureties Trust

Month 1-3: Calibrate cost codes to the estimate structure. The first months of WIP from ControlQore typically show some variance between projections and actuals as the cost code structure is calibrated to the specific trade and estimate format. This is normal and expected. SPM works through this calibration in the first 60 days of engagement.

Month 3-6: Projections within 10% of actuals consistently. As the cost code structure stabilizes and foremen develop consistent posting habits the WIP projections become more accurate. By month 6 most SPM clients are within 5-8% of actual closeout margins on WIP projections.

Month 6-12: Projections within 5% of actuals. The track record is beginning. The surety can compare 6 months of WIP projections against actual closeout margins and see consistent accuracy. This is the beginning of the trust that increases bonding limits.

Month 12-24: Premium bonding limits available. 12-24 months of consistent monthly WIP from actual ControlQore data with projections consistently within 5% of actual closeout margins is what sureties want to see. At this point bonding limit discussions change from "what collateral will you put up" to "what limits do you need."

FAQ

Frequently Asked Questions

What does a surety require in a WIP schedule?

A current WIP schedule calculated using the cost-to-cost method from actual job costing data. The WIP must show: contract value, estimated cost at completion (updated from actual cost trajectory), actual cost to date, percentage complete (actual cost divided by estimated total cost), revenue earned (percentage complete times contract value), amount billed, and overbilled or underbilled position by job.

How does WIP accuracy affect bonding limits?

A contractor with 24 months of monthly WIP where projections have consistently matched actual closeout margins within 5% gets materially better bonding terms than an identical contractor with no WIP history. Sureties set single-project limits at 10-15% of net worth and aggregate limits at 20-25% of net worth - but they will go above those ratios for contractors with demonstrated financial management sophistication.

Can I produce a WIP schedule for my surety without a job costing system?

You can produce a WIP schedule without a job costing system but it will not carry the same credibility. A WIP calculated from actual cost data posted daily by foremen to ControlQore cost codes is verifiable and consistent. A WIP estimated by the owner or PM without underlying cost data is not verifiable and will be treated as an estimate rather than a financial statement by the surety.

How often should I produce a WIP schedule for my surety?

Monthly. Sureties prefer monthly WIP because it shows active financial management and produces the 12-24 month track record that increases bonding limits. Quarterly WIP is the minimum most sureties will accept. Annual WIP produced at bonding renewal is not a track record - it is a snapshot.

What Sureties Require in aWIP Schedule.

What You Need to Know

The Four WIP Elements Sureties Evaluate

24 Months of WIP That Sureties Trust

Frequently Asked Questions

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What Sureties Require in a
WIP Schedule.