When a construction contractor works on contracts that span more than one month, the Work in Progress (WIP) schedule becomes critical to understanding profitability. Without the WIP schedule, monthly income may be overstated when the contract is billed in advance, and monthly income can be understated when the contract requires work to be performed in advance of billing. When completed correctly, the WIP schedule becomes essential for identifying which contracts may have income overstated or understated at the end of a particular month.

Overhead costs can also impact profitability, and the WIP schedule is a key to understanding overhead costs for the construction contractor. The WIP schedule can be used to analyze job costs by job and job costs across all jobs. The difference between job costs allocated to jobs (direct costs) and job costs not allocated to jobs (indirect costs) is often referred to as overhead costs. On the WIP Schedule, the contractor can assign overhead costs to jobs in a consistent manner and get a more realistic picture of individual job profitability than can be obtained by looking at direct job costs alone.

Once we get a clearer understanding of overhead costs through the WIP schedule, we can analyze profitability in many areas within the contractor's business, including refining job estimating and bidding.

If you still need to get a process in place to prepare the WIP schedule on a monthly, quarterly, or bi-annual basis, Punch List Accounting can make that happen for your business. If you are interested in discussing this further, select the "Get In Touch" button at the top of the page, then call us, email, schedule an appointment, or submit the form, and we will reach out to you.

If you are interested in preparing the WIP schedule on your own, the best place to start would be the Punch List Accounting WIP Schedule Template, which includes detailed instructions for preparing the WIP Schedule. As a thank you for signing up for our newsletter, Punch List Accounting Weekly Insight, we will send you a free download of the Punch List Accounting WIP Schedule Template. To sign up, copy and paste the following link into your web browser and then enter your email address on the landing page:

https://punchlistaccounting.ck.page