A work-in-progress (WIP) report is the single most important financial report for a contractor. Your bonding company reads it, your bank reads it, and it tells you which jobs are actually making money before the job is over. It is also, at many subcontractors, a spreadsheet someone rebuilds by hand every month.
What a WIP report shows
For every open job, a WIP report compares what you have earned so far with what you have billed. The difference tells you whether you are ahead or behind on billing — and whether the job’s profit is holding.
The core calculation
Most contractors use the cost-to-cost method:
Example: a $1,000,000 contract with an estimated total cost of $800,000. You have spent $400,000, so the job is 50% complete and you have earned $500,000. If you have billed $560,000, you are over-billed by $60,000 — cash you have collected for work not yet done. If you have billed $450,000, you are under-billed by $50,000.
Why over- and under-billing matter
- Over-billing is a liability. It helps cash flow now, but the work still has to be paid for later.
- Under-billing is an asset on paper, but persistent under-billing often means unbilled change orders, a slipping estimate, or a job losing money.
- Sureties and lenders watch both. A WIP that swings wildly month to month raises questions.
Where WIP reports go wrong
- Committed cost missing. Purchase orders issued but not yet invoiced make a job look further along — or cheaper — than it is.
- Pending change orders. Approved changes belong in contract value; pending ones should be tracked separately so they don’t inflate profit.
- Stale estimates. If estimated total cost is never updated, percent complete is wrong and so is everything after it.
- Manual assembly. Copying numbers from accounting, purchasing and billing into a spreadsheet introduces errors every month.
Producing WIP from the system, not a spreadsheet
The fix is to produce WIP from the same place the costs live: purchase orders, receipts, subcontract billings, labor from time cards and billings to the GC. In Kreaiten, WIP reports are built from the job’s own budget, cost and billing data, in the format each company already uses — so month-end is a review, not a rebuild.