The numbers behind smarter project decisions in construction
- Part I: What is WIP Reporting and Why it Matters
- Part II: What’s the Difference Between Job Cost and WIP?
- Part III: How to Get Started with WIP
- Part IV: Understanding Key WIP Metrics (Earned Revenue, Over/Under Billings, FCAC)
- Part V: The Role of Project Managers in Accurate WIP Reporting
- Part VI: What to Look for in a WIP Reporting Solution
- Part VII: How Sage Intacct Automates WIP Reporting and Saves You Time
- Part VIII: How to Transition from Excel to Sage Intacct WIP Reporting?
A Work in Progress (WIP) report isn’t just a stack of numbers; it’s a story about your projects. Each calculation sheds light on where a job stands, whether profits are holding steady, and how billing compares to earned revenue. When you knowhow to read these numbers, you can make better, faster decisions to keep projects on track.
Here are the key WIP metrics every contractor should understand and what they tell you about your jobs.
1. Percent Complete
Formula: Job-to-date cost ÷ Forecasted cost at completion (FCAC)
What it tells you: How far along a project is based on costs incurred compared to the total expected cost.
This is the foundation for WIP reporting. If a project is 60% complete, you should be about 60% into your costs and about 60% into your earned revenue. If those percentages don’t align, it’s a red flag.
2. Earned Revenue
Formula: Percent complete × Total contract value
What it tells you: How much revenue your company has earned — not just billed — based on work performed to date.
Earned revenue matters because billing alone doesn’t always tell the truth. You might have billed ahead of progress (overbilling) or fallen behind on invoicing(underbilling). Earned revenue gives you the true financial picture, regardless of invoices sent.
3. Over/Under Billings
Formula: Billed amount – Earned revenue
What it tells you: Whether you’ve billed more (overbilling) or less (underbilling) than there venue you’ve earned.
Overbilling creates short-term cash flow but can mask underlying performance issues.
Underbillingmight mean slow invoicing, disputed change orders, or missed milestones . . .and that can strain cash flow if left unchecked.
Consistently tracking this metric helps you stay ahead of billing disputes and spot practices that could eat into profitability.
4. WIP Gross Profit
Formula: Earned revenue – Job-to-date cost
What it tells you: The profitability of a project at its current stage.
This is where the rubber meets the road. WIP gross profit shows whether the project is on pace to meet its margin goals. If gross profit is shrinking compared to your original estimate, you may be seeing profit fade. This is a telltale sign that it’s time to review labor productivity, material costs, or scope changes.
5.Forecasted Cost at Completion (FCAC)
Formula: Job-to-date cost + Estimated cost to complete
What it tells you: The best estimate of the total cost of the project once finished.
FCAC is one of our favorite WIP numbers because it’s so powerful. It gives contractors the ability to look forward instead of just backward. If the forecasted cost creeps above the original budget, it’s a clear signal that corrective action is needed— whether that means tightening labor costs, renegotiating with subs, or addressing delays.
Why These Metrics Matter
On their own, each metric offers a snapshot of project health. Together, they create a complete picture:
- Percent complete shows where you are.
- Earned revenue tells you what you’ve earned so far.
- Over/under billings highlight billing practices that could hurt cash flow.
- WIP gross profit reveals if margins are holding steady.
- FCAC projects where you’re likely to end up.
When contractors use these numbers consistently, they gain visibility, predictability, and confidence — not just in a single job, but across the entire business.
Turning Metrics Into Action
The challenge isn’t just calculating these metrics. It’s making them part of a regular reporting process. That’s where software like Sage Intacct Construction makes the difference. Intacct automates calculations, pulls data directly from job costing, and presents real-time WIP metrics in one place. No more chasing spreadsheets or worrying about outdated numbers.
See WIP Metrics in Action
At Alliance Solutions Group, we help contractors turn raw numbers into reliable insights. With Sage Intacct Construction, we’ll show you how to track the right WIP metrics, generate accurate reports, and make decisions that protect your margins. Ready to see how it works? Contact us for a personalized demo.
