What Is a WIP Report in Construction?

By Martin · Updated 2026-02-02

A WIP (Work in Progress) report is a financial snapshot of all active construction projects, showing the relationship between costs incurred, billings to date, earned revenue based on percentage of completion, and projected profit. It's the single most important tool for managing construction profitability.

Why This Matters

After 20 years working with construction companies, I can tell you this: the WIP report is the single most important financial document you'll use. Your P&L tells you what happened last month. Your balance sheet shows where you stand today. But your WIP report tells you whether you're making or losing money on every active job, right now.

Banks and sureties don't just want to see your WIP report. They require it. A bonding company won't even look at your application without seeing clean, current WIP reporting. And they're right to demand it, because the WIP report reveals problems long before they show up anywhere else.

How It Works

A WIP report is built on one core calculation: percentage complete equals costs to date divided by estimated total cost. If you've spent $400,000 on a job you estimated at $1,000,000, you're 40% complete. Apply that 40% to your contract value, and you know your earned revenue.

Here's what each column means:

Contract Value: The total amount you're getting paid (including approved change orders)
Costs to Date: Every dollar you've spent so far — labor, materials, subs, equipment
Estimated Cost at Completion: Your current best guess of total costs when the job's done
Billings to Date: How much you've actually invoiced the client
Earned Revenue: Contract value × percent complete — what you've truly earned based on work performed
Over/Under Position: The difference between billings and earned revenue

That last number is what your banker stares at. If you've billed $500,000 but only earned $400,000, you're $100,000 overbilled. You owe work. If you've earned $400,000 but only billed $300,000, you're $100,000 underbilled. They owe you payment.

The Real-World Impact

Let me give you a concrete example. You're running a $2 million job. You've spent $800,000 and billed $1,000,000. Looks great, right? Cash is flowing.

But run the WIP:

Estimated total cost: $1,800,000 (you've tightened up from the original $1.6M estimate)
Percent complete: $800K / $1.8M = 44.4%
Earned revenue: $2M × 44.4% = $888,888
Billings to date: $1,000,000
Over/under: $111,112 overbilled

You've collected $111,000 more than you've earned. That's not profit. That's a liability. You owe that work, and when you deliver it, there won't be corresponding cash coming in. This is how profitable companies run out of cash.

Common Mistakes

The biggest mistake I see is treating the WIP report as a compliance exercise instead of a management tool. Contractors run it quarterly because the bank wants it, then stick it in a drawer. That's insane.

Run your WIP monthly, at minimum. Weekly is better on large jobs. The whole point is catching problems early. Margin fade doesn't show up in your bank account until it's too late. It shows up in your WIP report when there's still time to fix it.

Second mistake: garbage in, garbage out. If your job cost system is a mess, your WIP will be fiction. Make sure costs are posted to the right jobs. Update your estimates when conditions change. Include approved change orders in both contract value and estimated costs.

Third: ignoring the story the numbers tell. A 15% gross profit job that's 60% complete should show about 15% margin. If you're seeing 8%, you've got margin fade. Don't wait until the job closes to find out you lost money.

The Bottom Line

The WIP report is your early warning system. It tells you which jobs are performing, which are bleeding, and whether you're sitting on real profit or just borrowed time.

Run it consistently, keep your estimates current, and actually read what it's telling you. Your banker and surety will demand it. But more importantly, you need it to run a profitable construction company.

Every contractor I've seen go under had the same problem: they didn't know they were in trouble until it was too late. The WIP report makes sure you know.