Somewhere around the second year, a small contractor gets asked for a WIP report. By the bank for a line of credit, by a bonding agent, or by a new accountant who wants to close the year properly. The contractor has never made one, and the accountant's version, produced in March, moves the year's profit by tens of thousands of dollars in a direction nobody expected. The report isn't hard. It just needs numbers most small contractors don't keep current.
What a WIP report is
One row per open job. The columns:
| Column | Where it comes from |
|---|---|
| Contract value | The signed contract plus approved change orders |
| Estimated total cost | Your current estimate at completion, not the original bid |
| Cost to date | Recorded costs on the job, including committed costs the accountant accepts |
| Percent complete | Cost to date divided by estimated total cost |
| Revenue earned | Percent complete times contract value |
| Billed to date | Every invoice issued on the job |
| Over / under billed | Billed minus earned |
The last column is why the report exists. Billed more than earned is overbilling: cash you hold that belongs to the rest of the job, a liability on the balance sheet. Billed less than earned is underbilling: revenue you've earned and haven't asked for, an asset, and usually a sign the invoicing habit is behind the work.
A worked row
Kitchen on Westlake: contract $68,000 plus $3,100 in change orders, $71,100. Estimated total cost $50,400. Cost to date $31,900. Percent complete: 63%. Revenue earned: about $45,000. Billed to date: $50,700 (draws of 30% and 40% of the original contract, $47,600, plus the $3,100 change order). Overbilled by about $5,700.
That's not a problem; it's the draw schedule doing its job, keeping the client's money ahead of costs. It becomes a problem when the $5,700 is spent on another job's payroll and this job's finishes arrive. Across three jobs overbilled the same way, a contractor can feel flush in October and be unable to make payroll in December when all three finish at once.
Why the estimate at completion is the column that matters
Every other column is a fact. Estimated total cost is a judgment, and the whole report leans on it. Use the original bid and a job that's going to overrun by 10% shows as further along than it is, its earned revenue is overstated, and its overbilling is understated. The honest figure is recorded cost plus cost to complete: the commitments still to be invoiced plus what's left to buy and build. The committed costs guide is that arithmetic, and it's the same number a contractor needs mid-job for reasons that have nothing to do with the bank.
What overbilling and underbilling do to the year
At year end, overbilling on open jobs is subtracted from revenue and underbilling is added. A contractor who was overbilled $40,000 across open jobs on December 31 shows $40,000 less profit than the invoices suggested; one underbilled $40,000 shows more. That's the March surprise. It's not the accountant moving money; it's the report catching up with the work. Contractors who keep the report monthly see the swing coming and can bill, or slow billing, in December instead of learning about it in March.
Build it monthly from what you already have
If each job has a current contract value, a running recorded cost, a reviewed estimate at completion and a list of invoices issued, the WIP report is a spreadsheet with seven columns and a row per job, done in twenty minutes on the first of the month. Obra keeps the first four per project: adjusted contract value, recorded cost, the reviewed remaining to spend and expected final cost, plus cash collected. Export them and add the billed column; the QuickBooks guide covers where the invoicing side usually lives. The job cost and profit calculator runs a single row on paper.
Questions people ask
Do I need a WIP report if I'm a small residential contractor? Not for the IRS on a cash basis, but for a bank, a bonding company, an accountant closing on the percentage-of-completion method, or your own understanding of why a busy year ended thin, yes.
How often should I produce it? Monthly is the standard; quarterly is the minimum that stays useful. Once a year, in March, is the version that surprises people.
What counts as cost to date? Costs recorded on the job. Whether committed-but-uninvoiced costs are included depends on your accountant's method; either way, the estimated total cost has to include them or the percent complete is wrong.
Get the template
The free job costing spreadsheet below keeps each job's costs and payments on their own sheets, which is the cost-to-date and billed-to-date input to a WIP row. Enter your email and the download starts right away.