Have you ever wondered how construction project managers keep track of the progress of their projects?
Well, one of the key tools they use is the WIP Work in Progress schedule report. This report shows how much construction work has been done, how much it has cost, and how much revenue has been generated. With an accurate construction Work in Progress report, project managers can assess if their project is on schedule, if adjustments are needed, and if they are profitable.
But how do you calculate a WIP report? What are some problems that you should try to avoid? And what are the best tips to maintain an accurate report?
In this article, we'll answer these questions. We'll show you how to calculate WIP, point out common challenges, and provide five expert tips to keep your report accurate and current. Read on to learn how to use a WIP report to make your construction projects a success, whether you're an experienced project manager or just starting out.
Building for Success: How a WIP Schedule Report Can Make or Break a Project Manager's Career
As a project manager, your success depends on your ability to deliver projects on time, within budget, and to the client's satisfaction. To achieve this success, you need an accurate WIP report.
Firstly, an accurate WIP report helps you track progress and identify potential issues in a project.
By keeping a close eye on the WIP report, you can spot any potential delays or cost overruns before they happen. This enables you to take timely action to address these issues and keep the project on budget.
Secondly, an accurate WIP report helps you make informed decisions about the project's direction.
An accurate WIP report might show where extra resources are needed or where the project can be simplified to reduce costs. This allows you to make the right decisions to keep the project moving forward.
Thirdly, an accurate WIP report establishes your reputation and build trust with clients.
Consistently delivering successful projects can earn you a reputation for reliability and expertise in your field. This can lead to repeat business and new opportunities for career growth.
However, failing to deliver a project on time or within budget can ruin your reputation and hurt your career. Clients may be reluctant to work with you again, and your reputation may suffer.
This makes it crucial for project managers to prioritize an accurate WIP schedule!
How to Calculate WIP (with an example)
Construction companies can't afford to make guesses when it comes to their finances. Accurate and current records are essential to track project completion and income expenses. And that's where the WIP report comes in. It lets you evaluate where you are financially on each job so you can make better decisions and stay profitable.
When accurate numbers are easy to find, people make fewer mistakes, and the business starts making more money right away.
A typical WIP schedule report might look like this:
There are three formulas that we use to create a simple chart like this:
Percentage Of Completion = Costs Incurred / Estimated Cost
Earned Revenue = % Complete (POC) x Contract Value
Over / Under Billings= Total Billed - Earned Revenue
Surviving the Pitfalls of WIP Reporting:
Common Problems to Avoid
Construction project managers need precise WIP reporting to succeed. WIP reports can be affected by data entry mistakes, duplicate data input, non-standardized data, and human error.
Construction Cost Accounting (CCA) says manual WIP reporting can lead to inaccuracies that hurt project profitability and completion.
Spreadsheets can make it hard to keep track of inventory resources, vendors, and resources that change every day. This can lead to mistakes when entering data and other problems that can hurt the success of the project.
Key pitfalls to avoid include:
Failing to include all costs associated with a project in the WIP report
Failing to update the WIP report in a timely manner
Not accounting for changes in project scope or timeline
Errors in data entry
Duplicate entries from different departments
To avoid these problems, invest in a reliable and standardized WIP reporting system. Partnering with CCA can help you avoid common errors in WIP reporting, and have accurate data and expert advice on best practices for WIP reporting.
5 Must-Follow Tips for Accurate WIP Reporting
Are you struggling to produce accurate WIP reports for your construction projects? Follow these five tips to ensure you're on the right track:
To improve the quality of WIP reports, project managers should follow these five tips:
Standardize Your WIP Reporting: Use a consistent format for all WIP reports to make it easier for you and your team to stay organized.
Keep Accurate Records: Record all costs associated with the project, including labor, materials, and overhead expenses. Don't overlook any details that could impact your financial reporting.
Regularly Update Your WIP Report: Keeping your WIP report up-to-date ensures that you have the most current information at your fingertips.
Account for Changes: Changes to project scope or timeline can significantly impact your WIP report. Be sure to update your report accordingly to avoid inaccuracies.
Stay Informed: Stay up-to-date on industry trends and best practices for WIP reporting. This will help you develop more efficient and effective reporting processes.
By following these tips, you'll be able to produce more accurate WIP reports and make informed decisions for your construction projects.
We hope this article has helped you understand how important the construction Work in Progress report is. How it can help construction project managers keep their projects on track and make money. You can effectively calculate your WIP report and assure success by following the tips offered.
CCA Inc. uses Sage 100 Contractor because we know how vital accurate and timely WIP reporting is for the construction industry. Our clients also receive the best service and expertise because we follow the Construction Financial Management Association's practices. Trust CCA can assist you to manage your building projects' financial complexity and optimize profits.