Updated: Apr 13
As the owner of a construction business, it's important to keep track of how projects are going. That's where the construction WIP report (also known as the construction Work in Progress schedule) comes in. It gives you a quick look at the financial health and status of your ongoing project.
Yet, creating an effective WIP report may be challenging. We've prepared this blog to simplify the WIP report's components with an infographic.
We also go into more detail about each element to help you understand how they all fit together in a Work in Progress report.
By the end of this blog, you'll know how to make a construction Work in Progress schedule that keeps your projects on track and helps your business grow. Let's get started!
Infographic - Key Components of a WIP Report Going Deeper - Exploring Each Element of a WIP Schedule Report “How Often Should I Run a WIP Report?”
Infographic - Key Components of a WIP Report
In the first part of this blog, we'll give you an infographic that sums up the parts of a WIP report. This section shows construction business owners the WIP schedule's components.
You will understand the big picture before diving into the details.
Now, let's dive into the infographic on the components of a WIP report.
This infographic on WIP report components should help you grasp the larger picture. If you want to track your construction projects' finances, you need to know how WIP reports work. And tracking Work in Progress is significant as well. Now that we've covered the basics, let's go over each component further.
Going Deeper - Exploring Each Element of a WIP Schedule Report
In this section, we'll dig deeper into each part of a WIP report. We'll give detailed explanations of what each element means and how to calculate WIP and present the data in a clear and concise way.
The Construction Financial Management Association (CFMA) provided this information.
WIP reports are critical for project managers and owners because they help keep projects on track. After reading this, you'll know what to look for in a WIP report. You'll also learn how to use that data for construction projects. Let's begin!
The Work in Progress calculation methods...
Current Contract Value
Note: If work on an unapproved change order hasn’t started yet, its value shouldn't be included in the contract.
Estimated Gross Profit
© Estimated Profit = (a) Estimated Contract - (b)Estimated Cost
(e) %Complete = (d) Cost incurred - (b) Estimated costs
(f) Earned profit = © Estimated gross profit * (b)% Complete
(g) Earned revenue = (d) Costs incurred + (f) Earned profit
Column I (or H - G)
By presenting each element in more detail as well as the WIP formula, we hope this section has given you the knowledge and tools you need to create effective WIP reports.
Remember that while the ideas we have talked about are useful in general, it is important to make your work-in-progress report fit the needs of your specific projects.
Use the best practices we have given you and keep your WIP report up-to-date to keep your projects on track and making money.
“How Often Should I Run a WIP Report?”
Running a WIP report can be challenging, especially if you have many projects across different states.
There is no one-size-fits-all format for WIP reports. Therefore, the frequency of which you generate them depends on your business goals and the number of ongoing projects you have. You may decide to run WIP reports monthly, weekly, quarterly, or only at the end of projects.
However, if you rely on the previous week's or month's data to create your WIP report, it will put you a step behind in actual costs. This can lead to critical decision-making delays. To keep this from happening, the CCA team offers expert bookkeeping services to the construction industry. These provide the most up-to-date financial information for an accurate WIP schedule report.
You can better understand your company's general health and project progress by having company-wide and job-specific WIP reports. The CCA team will provide the financial information you need to make timely choices and keep your construction firm on track. For success. Contact us today for a free quote!