The Art of Crafting a WIP Report [Infographic]

For construction business owners, monitoring the progress and financial status of ongoing projects is essential. This is where the construction WIP report, also known as the construction Work in Progress schedule, becomes invaluable. It offers a clear snapshot of the project's financial health and current status, helping with maintaining financial control and improving project profitability.

Creating an effective WIP report can be complex, so we've put together this blog to break down its components with the help of an informative infographic. We'll also explore each element in detail to show how they come together in a sample Work in Progress report, enabling accurate WIP reporting and better resource allocation.

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!

Table of Content:

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

To start, here’s an infographic highlighting the critical components and key elements of a WIP report. This overview helps construction business owners understand the key components of a WIP schedule before we delve deeper.

Understanding these elements is crucial for effectively tracking your construction projects’ finances and managing Work in Progress accounting, ensuring accurate financial reporting and project management.

This infographic provides a big-picture view of WIP report components. One of the key elements is the total estimated costs, which provides transparency into projected project expenses and helps with overall cost management. A WIP report shows the current status of project finances, progress, and resource allocation, supporting informed decision-making in construction project management.

Going Deeper - Exploring Each Element of a WIP Schedule Report

Now, let’s examine each part of a WIP report in detail. We’ll explain what each element represents, how to calculate WIP accurately, and how to present the data clearly and concisely.

WIP reports are vital tools for project managers and business owners as they help keep projects on track, improve cost management, and provide a more accurate picture of project progress, ongoing work, and profitability. Tracking ongoing work and its impact on project reporting is essential for maintaining control and visibility throughout the project lifecycle. After reading this section, you’ll know what to look for in a WIP report and how to apply that information to manage your construction projects effectively.

The Work in Progress report calculation methods:

Column A	Current Contract Value	This represents the contract value at a specific point in time. It reflects the contractor’s best estimate of the total contract value upon completion, including approved change orders and current completion status. Unapproved change orders where work hasn’t started should not be included. This figure is essential for accurate financial statements and project budget tracking.
Column B	ECAC	The Estimated Cost at Completion (ECAC) is the contractor’s estimated cost at completion. It's their best estimate of what the total costs are going to be at the completion of the project, including costs already incurred.
Column C	Estimated Gross Profit	Calculated as the current contract value minus the estimated cost at completion. * © = (a) - (b) © Estimated Profit = (a) Current Contract Value - (b) ECAC
Column D	Costs Incurred	This is the contractor’s cost incurred to date and will come directly from their ERP system
Column E	% Complete	Relying on the information provided in the previous columns is vital to the next column. The percent complete is the costs incurred to date divided by the estimated cost at completion. This is the percent complete based on the cost-to-cost method. (e) = (d) /(b) (e) %Complete = (d) Cost incurred - (b) Estimated costs
Column F	​Earned Profit	The earned profit is the estimated gross profit times the percentage complete (f)= © * (e) (f) Earned profit = © Estimated gross profit * (b)% Complete
Column G	Earned Revenue	This represents earned revenue, which is the costs incurred to date plus earned profit. Also, you can calculate this by looking at the current contract value times the percent complete. Both formulas will give you the same result. (g) = (d) + (f) (g) Earned revenue = (d) Costs incurred + (f) Earned profit
Column H	Total Billed	Next is their total billed to date. Again this information will come from the contractor’s ERP system, representing actual invoices that were produced and submitted to the customers
Column I (or H - G)	Overbilling/ Underbilling	And the final column calculates Over or Underbilling by taking the total billed minus earned revenue. If they have billed more than they have earned in revenue, that's an overbilling. If they’ve billed less than they’ve earned in revenue, that's an underbilling

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 Construction Cost Accounting 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!