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To improve financial visibility, connect each job’s estimate, actual costs, projected final cost, progress, billings and accounting reports—and review the connections regularly. A work-in-progress (WIP) schedule is a useful way to do that: it helps show how much revenue has been earned through a reporting date and how each project is performing financially. It is not a substitute for sound accounting or a guarantee of cash flow.
What financial visibility means on a construction job
A job can look healthy in one report and troubled in another. Cash received may be ahead of work performed; costs to date may be within budget even as the projected cost to finish rises; or an estimate may no longer reflect what the field team expects to spend. Financial visibility means bringing these measures together, using consistent assumptions, and investigating differences before they become surprises.
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The work-in-progress schedule—often called a WIP schedule—is a core construction accounting report for tracking project progress and the financial value of work in progress. AICPA & CIMA describes it as a way to calculate revenue earned through a reporting date and evaluate project financial performance. AICPA & CIMA’s explanation of WIP schedules is useful background, but it does not replace applicable accounting standards or advice from a contractor’s CPA.
What belongs in a WIP schedule
An effective WIP schedule brings together contract value, the estimated total cost of the job, costs incurred to date and requisitions or billings to date. Those figures let the team compare the current financial picture with the work’s expected total economics.
- Contract price: the contract value used for the job’s financial tracking.
- Estimated total project cost: the current projection of what the entire job will cost, not merely its original budget.
- Costs to date: costs recorded against the project through the reporting date.
- Requisitions to date: amounts billed or requested for payment through that date.
AICPA & CIMA gives the illustrative example of spending $250,000 against a $1 million budget, which corresponds to 25% completion under that example’s calculation. That is an illustration, not a universal accounting rule: the appropriate calculation and revenue treatment depend on the accounting method and contract circumstances.
Why billings are not the same as earned revenue
Requisitions and billings help manage cash flow, but a billing does not automatically establish how much revenue has been earned. In the percentage-of-completion discussion quoted by AICPA & CIMA, Rob Mercado, CPA, CCIFP, managing director at CBIZ, explains: “Requisition doesn’t mean anything. It’s just a cashflow mechanism. When a contractor requisitions for money, that’s not revenue. They have to incur costs to create revenue.” His explanation concerns that accounting approach; revenue recognition should be evaluated using the applicable method and the facts of the contract.
Keeping billed amounts distinct from earned revenue helps prevent a common blind spot: treating cash timing as a complete measure of job performance. Review billings alongside costs, progress and the current projection rather than using any one of them as a stand-in for the others.
How to review WIP without missing warning signs
AICPA & CIMA says WIP schedules are commonly updated monthly and cross-checked against other financial statements and discussions with project managers. A monthly review is a practical starting rhythm; the right cadence may depend on how quickly jobs change and the business’s reporting needs.
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- Refresh job inputs. Bring costs and requisitions current through the reporting date, and update the estimated total project cost using the latest available information.
- Check the figures together. Compare the WIP schedule with relevant financial statements and job records. Confirm that the estimate, costs, progress and billings refer to consistent periods and definitions.
- Discuss variances with responsible staff. Review differences with project managers or others close to the work. Ask what changed, whether the forecast reflects it, and whether a correction or further investigation is needed.
- Follow changes through. If new information changes the projected final cost or job outlook, ensure that the estimate and reporting reflect the change rather than leaving a stale forecast in place.
Consistent estimating matters as much as accurate data entry. Comparing unlike figures can make a job appear better or worse than it is. For example, a current cost total compared with an outdated estimate may create misleading comfort; align the periods and assumptions, then investigate the gap.
When training or software may help
Structured accounting instruction
Training can help when staff need a shared method for reading WIP or understanding how project changes affect the forecast. AGC of California describes construction accounting certificate training covering WIP elements, percent-complete calculations, markup versus margin, WIP adjustments, signs of problem jobs, projection changes and loss provisions. Check the AGC of California training page for current session availability; the page description is not an independent assessment of course outcomes.
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Software may be worth evaluating when job-cost detail is difficult to assemble, field and office information is disconnected, or financial updates do not reach decision-makers in time. Vendor pages describe construction financial products and capabilities, but marketing claims alone do not establish that a system is right for a particular contractor. Compare options on the workflows that matter to your team:
- How costs are assigned and reported by job.
- Whether the system supports the WIP information and review process your accountant needs.
- How field and office teams share updates and historical job information.
- How quickly changes to costs or projections reach the people responsible for decisions.
- Current pricing, implementation needs and fit with existing systems.
Sage describes contractor-focused software on its construction industry page and product information pages for Sage Construction Management. These are vendor descriptions, not independent product evaluations. Request current details and assess the workflow against your own reporting requirements before choosing software.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why earlier visibility matters
Cash-flow strain can be consequential for construction businesses, but industry survival figures need careful context. AICPA & CIMA reports that 35.9% of U.S. construction companies founded in March 2011 remained in operation by March 2022, citing the U.S. Bureau of Labor Statistics; it also says poor cash-flow management contributes to business failures. That is a specific cohort endpoint, not a current annual failure rate. The AICPA & CIMA article provides the reported figure and context.
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