7 Key Metrics of a WIP Series: Completed Billings to Date
A work in progress (WIP) statement records the information necessary for the percentage of completion calculations and provides crucial information about the total value and progress of work completed. In most cases, revenue is considered earned after a service is complete or product ownership is transferred. If revenue recognition, however, is delayed until the end…
7 Key Metrics of a WIP Series: Total Estimated Revenue
Percentage-of-completion accounting and performance obligation revenue recognition are 2 construction industry tools for calculating total estimated revenue. In the construction industry, time is money. As professionals, contractors provide clients with key deliverables over a specified timeline, basing costs on the number of resources necessary to complete the job. Therefore, determining when you’ve ‘earned your pay’…
7 Key Metrics of a WIP Series: Cost to Complete
For long-term construction projects, contractors must accurately estimate the cost to complete (CTC) to precisely determine project performance and avoid surprises that could hurt profitability or deter lenders and sureties. Understanding your CTC early on will give you the opportunity to quickly address issues that hinder productivity or increase your overall costs. Estimating Cost to…
7 Key Metrics of a WIP Series: Total Estimated Cost and Profit Fade Reduction
Contractors use work-in-process (WIP) schedules to measure revenues and gross profit so bankers, bonding agents, and underwriters can view project profitability on a project-by-project basis. WIP schedules also act as reassurance that revenue, contract costs, under billings, and over billings will reconcile to the profit and loss statement as well as the balance sheet. However,…