WIP Schedule Best Practices using Cabbage and Sage 100 / Sage 300 Construction

A work-in-progress (WIP) schedule is the holy grail in the construction industry. Unlike the traditional system of calculating profit or loss on overall cost, the WIP uses percentage of completion (PCM) method to determine the profitability of a contract.

Here are some best practices to make it work for your business.

Be Accurate

When preparing a WIP schedule, make sure costs are accurately allocated to jobs. Without precision, the entire purpose of the WIP is lost.

Be Timely

An effective WIP schedule requires timely updates of costs and billing details – ideally, you should update them weekly. If the updates are in real-time and based on actual costs, the WIP schedule is an insightful business tool for the contractors.

Make it Exhaustive

Every job in the WIP schedule should include the direct costs and a portion of the indirect costs regarding the company’s operations, as that helps ascertain the actual outlay on a project.

Scrutinize the Estimated Costs

There’s always an estimate of what it will cost to complete a project, and it requires stringent scrutiny for a logical and specific solution. If the costs are estimated accurately, the fade will be subsequently lower.

When assessing the actual value of a contract, a best practice is to include approved change orders in the final figures. This allows you to avoid situations where profits are overstated and revenues incorrectly calculated.

Most importantly, ask an expert CPA to assess your WIP statement before sending it to a bonding agent – they can recommend corrections and adjustments for a surety review.

An accurate WIP schedule offers multiple benefits to your company’s bottom line. With Cabbage, you can implement best practices and accurately measure the profitability of your projects. Contact us for more information.