Part I of a contractor’s 8-part guide to tracking job progress, profitability, and financial health while the work is still underway.
- 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?
When you’re running a construction company, it’s not enough to know where your projects were last month. You need to know—right now—whether jobs are running on budget, how much profit you’ve actually earned, and if your billings reflect the work that’s been completed. That’s the value of Work in Progress (WIP) reporting.
WIP reporting is a method of tracking the financial performance of a project while it’s in progress. It helps you measure how much work has been completed, how much revenue you’ve earned, and whether your costs are aligned with expectations, all before the final invoice goes out. And for construction companies, where job scopes shift and margins can be razor thin, that kind of insight isn’t just helpful. It’s essential.
What Exactly Is WIP Reporting?
A WIP report compares the actual job costs you’ve incurred so far against the estimated total cost to complete the job. From that, it calculates the percent complete, which is a foundational number used to determine how much revenue you’ve earned and whether you're under- or overbilled.
Here’s how it works at a high level:
- Percent complete = Job-to-date cost ÷ Forecasted cost at completion (FCAC)
- Earned revenue = Percent complete × Total contract value
- Over/under billing = Billed amount – Earned revenue
These formulas help you spot key financial truths about a job. Are you ahead of schedule? Are you at risk of losing margin? Did you invoice too little or too much? By answering these questions monthly (or more often), you can spot red flags early and take corrective action before issues snowball.
Why Does WIP Reporting Matter?
WIP isn’t just about staying organized. It’s about building a financially stronger business. Here’s what accurate, consistent WIP reporting empowers you to do:
1. Make informed decisions in real time
A good WIP report gives you a clear, current picture of job performance—so you can act fast if a project starts to slide. Instead of reacting after the damage is done, you can revise forecasts, adjust staffing, or correct billing issues before they affect your cash flow.
2. Prevent profit fade
Profit fade—when projected margins gradually erode over the life of a project—is a common challenge in construction. WIP reporting helps you identify this erosion early by comparing original estimates to updated forecasts and actuals. That visibility helps preserve your margins.
3. Strengthen trust with external stakeholders
Banks, bonding companies, and sureties often require WIP reports to assess the financial health of your business. Clean, well-supported WIP reports show that you’re in control of your jobs, which can help you secure better financing terms and bonding capacity.
4. Improve internal communication
WIP reporting is most accurate when it brings together insights from both accounting and operations. Project managers contribute real-time knowledge about site conditions, pending change orders, or scheduling delays—factors that may not show up in the books yet but can greatly affect the forecast.
5. Lay the foundation for automation and growth
If you’re still managing WIP in spreadsheets, it’s hard to scale. Manual errors, outdated data, and inconsistent formats make it difficult to get reliable insights. Moving to a connected platform like Sage Intacct Construction allows for real-time updates, integrated forecasts, and standardized reporting, all critical for growing companies.
Common Pitfalls to Avoid
WIP reporting is only as good as the data that feeds it. Some common issues to watch out for:
- Infrequent updates: If you’re not reviewing your WIP report monthly (at minimum), you’re likely missing opportunities to adjust.
- Disconnected forecasts: If the accounting team is guessing at cost-to-complete without input from the field, your numbers might look good on paper but not reflect reality
- Overreliance on billing: It’s tempting to equate billing with progress, but earned revenue tells the real story. Overbillings can mask performance issues if you’re not careful.
- Spreadsheet errors: Manual entry mistakes can throw off your entire report. One extra zero or missed formula can lead to major misjudgments about job health.
Start Smart, Finish Strong
WIP reporting isn’t just a financial exercise—it’s a strategic advantage. It gives you the clarity to manage projects proactively, the visibility to reduce risk, and the predictability to grow with confidence. It also brings accounting and operations together around a shared understanding of what’s really happening on the job.
If you're ready to upgrade from spreadsheets to a smarter, more automated approach, Sage Intacct Construction makes it easy. It’s built to integrate forecasting, actuals, and billing in real time so you can generate WIP reports that are accurate, timely, and trusted.
Let’s Build It Together
Alliance Solutions Group helps construction companies take the guesswork out of WIP reporting. We specialize in implementing Sage Intacct Construction and can help you transition from manual reporting to a connected, cloud-based system that supports better decision-making.
Ready to see how it works? Contact us for a personalized demo.
