If you’re in construction, you’ve probably heard the term Work-in-Progress (WIP) report. For many contractors, it’s one of the most important financial tools they have—but it can also be one of the most misunderstood. This post focuses on helping contractors Understanding WIP Reports by explaining its components.

In simple terms, a WIP report is like a progress report for your projects’ finances. It shows how much work has been done, how much you’ve billed, and how profitable the project is likely to be when it’s finished.

Without it, contractors are flying blind—risking surprise losses, cash flow problems, and unhappy clients.

🏗 Why WIP Reporting Exists

Construction projects often span months (or even years). This makes it tricky to answer basic questions like:

  • How far along are we, financially?
  • Are we making or losing money?
  • Have we billed enough to cover our costs so far?

WIP reporting exists to bridge this gap. It tracks your financial progress alongside your construction progress, so you can spot problems early and make corrections before it’s too late.

Download Example WIP Report Excel Template

📥 Download Example WIP Report Template – Get a simple Excel file with sample project data, calculations, and all core WIP components. Use it to see how contract amount, costs, percent complete, and profit figures are calculated in practice.
Download WIP Report Excel Template

Understanding WIP Reports – Components Explained

Let’s break down the main parts of a WIP report and why they matter.

📥 Download Example WIP Report Template – Get a simple Excel file with sample project data, calculations, and all core WIP components. Use it to see how contract amount, costs, percent complete, and profit figures are calculated in practice.
Download WIP Report Excel Template

1. Contract Amount

  • What it is: The total value of the project, including any approved change orders.
  • Why it matters: This is the revenue ceiling—the maximum you’re allowed to bill for the job.

2. Cost to Date

  • What it is: All the costs you’ve incurred so far—labor, materials, subcontractors, equipment, etc.
  • Why it matters: It’s the foundation for calculating progress and earned revenue.

3. Cost to Complete (CTC)

  • What it is: Your best forecast of what it will take (in dollars) to finish the project.
  • Why it matters: If this number starts creeping up, your final profit could shrink. It’s an early warning sign.

➡️ Related Read: Cost to Complete in Construction

4. Total Estimated Cost

  • What it is: Cost to Date + Cost to Complete.
  • Why it matters: This shows the expected total cost at project completion, helping you forecast profitability.

5. Percent Complete

  • What it is: Cost to Date ÷ Total Estimated Cost.
  • Why it matters: This percentage drives how much revenue you should recognize under percentage-of-completion accounting.

6. Earned Revenue

  • What it is: Contract Amount × Percent Complete.
  • Why it matters: Shows how much revenue you’ve “earned” to date based on progress, not just billings.

7. Billed Revenue

  • What it is: The actual amount you’ve invoiced the client so far.
  • Why it matters: Helps you see if billing is keeping up with work performed.

8. Under/Over Billed

  • What it is: Earned Revenue − Billed Revenue.
  • Why it matters:
    • Underbilling: You’ve done the work but haven’t billed for it yet (bad for cash flow).
    • Overbilling: You’ve billed more than the work performed (good for cash now, but you’ll owe work later).

9. Gross Profit (to date)

  • What it is: Earned Revenue − Cost to Date.
  • Why it matters: Shows how much profit you’ve made so far.

10. Projected Gross Profit

  • What it is: Contract Amount − Total Estimated Cost.
  • Why it matters: Forecasts your final profit when the job is done.

11. Billing Status Notes

  • What it is: Comments about delays, pending change orders, retention, or other issues.
  • Why it matters: Numbers tell part of the story—notes add the context decision-makers need.

📌 Optional but Helpful Add-Ons

  • Change Orders (Approved vs Pending): Shows scope changes that may affect revenue.
  • Retention Held: Tracks money withheld until the project’s completion.
  • Cash Collected to Date: Tells you what’s actually in the bank.
  • Risk Flags: Highlights projects at risk due to cost overruns or progress delays.

🚧 Why Contractors Can’t Skip WIP Reporting

A good WIP report answers three critical questions for every project:

  1. Where do we stand today? – Costs, progress, and revenue earned.
  2. Are we ahead or behind? – Billing, profitability, and cash flow.
  3. What will happen next? – Based on forecasted cost to complete and remaining contract value.

Without it, contractors risk running profitable jobs into the ground without realizing it until it’s too late.

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