Work-in-Progress Schedule – A Must Have for a Construction Company
Adapted from blog post by Jerry J. Killian, CPA, CCIFP, Wiss & Company LLP
A Work-in-Progress schedule, also termed a “WIP” or a “status of contracts” (or a “Work-on-Hand”) is a must have for any construction company that performs contract work. The WIP report is a tool utilized to track the progress and financial performance of “Unstarted Contracts” to “In-progress” through “Completed Contract” phases of a contract life cycle.
The WIP report should be prepared monthly for use by management to understand how the Company is performing on its individual contract level and company-wide contracts. Preparation of a monthly WIP is the only accurate way to know what the true profitability of the Company is.
Given today’s construction market, a contractor needs to know where the individual contracts and the Company’s profitability is so that they can make decisions as problems or trends happen and not “react” once a year after the CPA closes the books.
If properly designed, updated and utilized, a WIP report can be used for reporting the status of contracts to the Company’s surety and bankers. In today’s surety climate, a WIP is required at 3-month and annual periods. In addition to surety companies placing a high value on a construction-industry-savvy CPA, they also place a high degree of reliance on the WIP and follow / track the numbers provided to them diligently. Do not take providing the surety company with WIP numbers lightly! You will not be eligible for best possible surety rates without proper WIP reporting. In many circumstances the sureties monitor the WIP Schedule even closer than top management in the Company. The importance of the WIP schedule should take top priority each month.
Although the initial setup of the WIP schedule may seem to be a little work, the long term benefits and the hours saved each month, quarter and year end is tremendous. Your Surety Company will be impressed, but more important than that, top management will have the right tools to manage the contracts and Company on a more timely basis.
Find Integrity Surety’s fillable WIP here. This form complies with SBA 994F requirement.
Email us with any questions!