WIP formulas (cost-to-cost method)
Percent complete = cost to date ÷ estimated total cost
Earned revenue = contract value × percent complete
Over billing = billed to date − earned revenue (if positive)
Under billing = earned revenue − billed to date (if positive)
What a WIP report shows
Each row is a job; the columns move from contract and estimate, through cost to date and percent complete, to earned revenue, billings, and the over/under billing that results.
| Column | Meaning |
|---|---|
| Contract value | Original contract plus approved change orders |
| Estimated total cost | Current estimate of the job’s total cost at completion |
| Estimated gross profit | Contract value − estimated total cost |
| Cost to date | Job cost incurred through the report date |
| Percent complete | Cost to date ÷ estimated total cost |
| Earned revenue | Contract value × percent complete |
| Billed to date | Progress billings issued through the report date (gross of retainage) |
| Over / under billing | Billed to date vs earned revenue |
| Cost to complete | Estimated total cost − cost to date |
Over billing vs under billing
Over billing means you have billed more than you have earned, so part of the cash belongs to work you still owe. Under billing means you have earned more than you have billed, which is revenue you have not yet turned into an invoice.
| Over billing | Under billing | |
|---|---|---|
| Also called | Billings in excess of costs and estimated earnings | Costs and estimated earnings in excess of billings |
| ASC 606 presentation | Contract liability | Contract asset |
| What it can mean | Front-loaded billing; cash that will be needed to finish the work | Slow billing, unapproved change orders, or a cost overrun the estimate does not yet show |
Under billing is not automatically good news. If the estimate is stale, cost to date pushes percent complete up and makes the job look earned when it is actually overrunning. Keeping estimated total cost current is the single most important input.
Worked example
Two jobs, same report date: one is $50,000 over billed, the other $40,000 under billed.
| Job | Contract | Est. total cost | Cost to date | % complete | Earned | Billed | Over / (under) |
|---|---|---|---|---|---|---|---|
| J-101 Office fit-out | $1,000,000 | $850,000 | $425,000 | 50% | $500,000 | $550,000 | $50,000 over |
| J-102 Warehouse slab | $400,000 | $340,000 | $272,000 | 80% | $320,000 | $280,000 | ($40,000) under |
How to build a WIP report step by step
Start from an up-to-date job-cost ledger and current cost estimates; the WIP math itself is simple once those two inputs are right.
- 1List every open job with its current contract value, including approved change orders.
- 2Enter the current estimated total cost for each job, updated by the project manager.
- 3Pull cost to date per job from the job-cost ledger, with all bills for the period coded and posted.
- 4Calculate percent complete = cost to date ÷ estimated total cost.
- 5Calculate earned revenue = contract value × percent complete.
- 6Pull billed to date per job from your progress billings.
- 7Over billing = billed to date − earned revenue when positive; under billing = earned revenue − billed to date when positive.
- 8Review fade, large over/under balances, and jobs whose estimates have not moved, then book the over/under adjustment if your accountant requires it.
Download our free WIP report template (CSV with formulas, or print it) to start.
Cost-to-cost and other ways to measure percent complete
Cost-to-cost is the most common method and is the default for long-term contracts under the federal tax code, but it can overstate progress when large material purchases arrive before they are installed.
- Cost-to-cost: cost incurred to date ÷ estimated total cost. IRC § 460(b)(1)(A) uses this comparison for tax percentage of completion.
- Uninstalled materials: under ASC 606 practice, significant materials that do not yet depict progress may be excluded from the measure and recognized at cost.
- Small contracts: IRC § 460(e) exempts construction contracts expected to be completed within two years by contractors that meet the gross receipts test from the percentage-of-completion requirement for tax. Book (GAAP) reporting is a separate question.
How often to prepare a WIP report
Monthly, after AP has posted the month’s bills and project managers have updated their cost-to-complete estimates — and whenever your bank, surety, or CPA asks for it with financial statements.
WIP reports in QuickBooks
Most QuickBooks Online editions have no contractor-style WIP schedule, so contractors export cost and billings by project and finish the calculation in a spreadsheet. Intuit added WIP reporting to QuickBooks Online Advanced as part of its August 2026 construction financials.
- 1Make sure every bill and expense line is tagged to its customer/project (see job costing in QuickBooks Online).
- 2Run Project profitability (or Profit and Loss by customer) for the period to date to get cost to date and invoiced to date per job.
- 3Add contract value (including approved change orders) and the project manager’s current estimated total cost.
- 4Paste the figures into the WIP template and review over/under billing per job.
Check whether your QuickBooks Online Advanced file shows the new WIP reporting before building the spreadsheet; Intuit’s announcement does not detail the calculation method, so compare it with the cost-to-cost formulas above. See job costing in QuickBooks Online.
Aequo Build
WIP in Aequo Build
Aequo Build generates a cost-to-cost WIP snapshot for a job from its contract value, the latest approved pay application, invoiced subcontract and purchase-order cost, and the project manager’s estimated cost to complete — showing percent complete, earned revenue, over or under billing, and projected margin. Because bills are coded to the job as they are approved, cost to date is current when you run it. Use the template on this site for a multi-job schedule.
Frequently asked questions
What does WIP stand for in construction?
Work in progress. A WIP report (or WIP schedule) covers every contract that has started but is not yet complete.
Is over billing good or bad?
Modest over billing helps cash flow, but it is a liability: the cash relates to work you still have to perform. Persistent large over billings without matching cash on hand are a warning sign to lenders and sureties.
Why would a job be under billed?
Billing has fallen behind the work, change orders are unapproved and unbilled, or the cost estimate is out of date and cost overruns are inflating percent complete.
Where do over and under billings go on the balance sheet?
Under billings are presented as a contract asset and over billings as a contract liability under ASC 606, usually netted per contract. Your CPA determines presentation.
Does QuickBooks Online have a WIP report?
Historically no. Intuit added WIP reporting to QuickBooks Online Advanced with its August 2026 construction financials; on other plans, pull costs and billings by project from QuickBooks Online reports and complete the calculation in a spreadsheet such as our template.
Related guides and tools
Sources
This guide explains common construction accounting practice. It is not accounting or tax advice; revenue recognition and balance-sheet presentation should be confirmed with your CPA.
- 26 U.S. Code § 460 — Special rules for long-term contracts (Cornell LII)
- Wiss — ASC 606 Implementation for Construction Contractors
- Trimble Spectrum help — Work-in-Progress: Billings Over/Under Cost
- Intuit — What’s new in QuickBooks Online Advanced, August 2026
- Intuit QuickBooks — Track income, costs, and profitability by project
Part of the Construction AP Knowledge Centre.