The WIP schedule, column by column: what each number tells your surety

A work-in-progress schedule is a job-by-job report showing, for every contract you have open, what you agreed to build, what you thought it would cost, what it has cost so far, how much you have billed, and what is left to finish. A surety underwriter reads it to answer one question: are your jobs going to finish where you said they would? Your capacity, your rate, and your single-job limit all follow from the answer.

The columns, and what each one is for

• Contract amount — the original contract plus approved change orders. Unapproved change orders do not belong here, and carrying them is one of the fastest ways to lose credibility with an underwriter.
• Estimated total cost — your current best estimate of what the job will cost to complete. Not the original bid.
• Estimated gross profit — contract amount less estimated total cost. This is the number tracked period over period.
• Cost incurred to date — actual cost booked against the job.
• Percent complete — cost incurred to date divided by estimated total cost.
• Earned revenue — percent complete multiplied by the contract amount.
• Billed to date — what you have actually invoiced.
• Over- or underbillings — the difference between billed to date and earned revenue.
• Estimated cost to complete — estimated total cost less cost incurred to date.
• Backlog — contract amount less earned revenue.

Percent complete, and why cost-to-cost is the method that counts

Effectively every surety works from the cost-to-cost method: percent complete equals cost incurred to date divided by estimated total cost. It is not a judgment about how far along the job feels or how many units are in place. It is arithmetic on two numbers you control.

That matters because it makes the schedule self-policing. Understate estimated total cost and percent complete rises, earned revenue rises with it, and the job looks more profitable than it is — right up until the remaining cost catches you and the margin collapses in a single period. Underwriters have seen that pattern many times, which is why they read the trend across periods rather than the snapshot in front of them.

Overbillings and underbillings

Earned revenue is what you have arguably earned. Billed to date is what you have asked for. The gap between the two is one of the most informative numbers on the schedule.

Overbillings — billings in excess of costs and estimated earnings — mean you have invoiced ahead of the work. That supports cash flow, and modest overbilling is normal and healthy. Heavy overbilling across the whole schedule is a different signal: the business is being funded by owners paying for work not yet performed, and if that work stops, the cash has to be returned in the form of performance.

Underbillings — costs and estimated earnings in excess of billings — mean you have performed work you have not been paid for. Sometimes that is simple timing. Often it is unapproved change orders, disputed quantities, or costs running past what the billing schedule allows. Persistent underbillings on one job are a common early signal of a job in trouble.

Profit fade is the first thing checked

Profit fade is the decline in a job's estimated gross profit from one reporting period to the next. If a job was carried at a 12% margin in the first quarter, 9% in the second, and 6% in the third, it is the fade the underwriter is reacting to — not the 6%.

Fade matters more than the absolute margin because it says something about estimating discipline, and estimating discipline is closer to what a surety is actually underwriting. One faded job with a clear explanation — a differing site condition, a subcontractor default — is a conversation. A pattern of fade across several jobs is a capacity problem.

The schedule has to tie to your financial statements

This is the check that catches the most contractors. Underbillings should appear on the balance sheet as a current asset. Overbillings should appear as a current liability. Revenue and cost of revenue on the income statement should agree with what the schedule produces.

When the WIP does not reconcile to the financials, the underwriter cannot rely on either document. That is a worse position than a schedule showing bad news, because bad news can be explained and an unreliable schedule cannot.

Concentration and backlog

The last read is structural. How large is your biggest job relative to the rest of the schedule, and relative to your working capital? A schedule where one contract dwarfs everything else raises the single-job limit question directly. Backlog — contract amount less earned revenue, summed across every job — tells the surety how much work you still have to perform on the same working capital and the same crews.

What to do with it

Understanding the columns is the first half. The second half is presenting the schedule so it works in your favour: keeping it current, reconciling it before you send it, and having an explanation ready for any job carrying an unusual position. That is covered in our guide, How Underwriters Read Your WIP Schedule, and a consistent WIP template is on the Resources page.