Financials and budgeting

How to create an ironclad work in progress construction (WIP) report

Graphic of a laptop showing the Work in Progress report feature in Buildertrend's construction software platform

As an owner of a construction business, knowing your bottom line is everything. This means making sure you’re always in a good place financially. Enhancing your construction reporting and financial management should be on your list of construction project management best practices – especially in today’s uncertain economic environment.

That’s why you need more than basic spreadsheets to keep track of your business finances. They’re nice for numbers, but when it comes to construction project management, you need more.

When one spreadsheet turns into multiple tabs of data that has to be updated manually, things can get unorganized and outdated quickly. In order to complete your projects on time and on budget, you need a financial reporting process that allows you to see where you stand at any stage of a job.

That’s where work in progress – or WIP – reports come in handy.

A construction work in progress report creates a near real-time comprehensive report that allows you to see the right data at the right time. You can review assets like total billings, profit margins and cost to complete on individual jobs or across all in-progress jobs.

In this blog post, you’ll learn the definition of a WIP report, the benefits of using WIP reporting in construction and how to create one using construction software.

What is a construction work in progress report?

A construction work in progress report is a comprehensive overview of data that outlines the status of a construction project. It allows company owners or project managers to compare current numbers to the proposed project timeline in order to see if jobs are over-billed, under-billed or on budget.

What is included in a WIP report?

A WIP report in construction shows the current financial state of a project. It typically includes data like:

  • Total contract cost
  • Estimated project costs
  • Standing profit margin
  • Total costs accrued
  • Amount of revenue billed
  • Amount of revenue paid
  • Under and over billings
  • Job’s completion percentage

Why is WIP reporting important in construction?

Accountants can’t rely on Excel spreadsheets to deliver timely and accurate financial data to contractors, which is why WIP reporting is so essential to home builders and remodelers.

“95% of contractors go out of business their first five years, and mainly that’s because they don’t know their numbers,” said Mike Brown, owner of Heroic Construction in Delray Beach, Florida. “So, I’d say if you want to have a good grasp on your business, you have to know your numbers – the WIP report is a great tool to help you do that.”

Having a comprehensive overview of each project’s financial status allows home builders to increase efficiency and accuracy. WIP reports reduce the chance of costly mistakes with manual data entry and ensure project managers maintain a precise bottom line for each job.

Who uses construction WIP reports?

If you’re the owner of your company, it’s likely you or your accounting team who will be using a WIP report. WIP reports get rid of the need for Excel spreadsheets with financial data in one place for easy tracking and updates in near real time.

“It’s amazing as a manager to be able to see all of the projects in one snapshot, so we don’t have to go digging around into multiple spreadsheets,” said Michelle Warren, president of Caliber Construction in Albuquerque, New Mexico.

WIP reports allow you and your team to quickly see data that shows you where your business stands on each project, so you can take immediate action and improve your margins.

“It’s the thing you’ve got to have,” said Travis Couick, owner of Stag Partners in Roswell, Georgia. “You’ve got to have your WIP report to be able to show you where things are sitting and how they’re trending. It helps on the billing side of things. It makes sure you can track your over and under billing and where you are on each project. It helps us further automate our activities internally and gives us the checks and balances we need that allow us to work more efficiently.”

What are the benefits of using WIP reports in construction?

The benefits of using WIP reporting include:

  • Real-time financial health updates
  • Insights into business growth
  • More informed decisions

WIP reports uncover a project’s financial health relative to its progress. For example, they can identify hiccups well in advance and help avoid a decline in profit down the road.

And that’s just how franchise home builder Lexar Homes in Spokane, Washington, has been able to gain insight for better consistency and growth. Data from reporting has allowed their team to make informed decisions for their business.

“To empower an owner to look at the health of a project and see its financial status before finish, that’s huge,” said James Moen, co-founder of Lexar Homes. “The better reporting for our franchisees, the more we’re able to help them grow and adapt to shifts in the market.”

This home builder loves the efficiency with which they can pull numbers and the direction it provides.

How do you create a construction WIP report?

Now that we’ve discussed what a WIP report is and why they’re crucial to the success of construction businesses, let’s talk about how to build one. Here are three guidelines to keep in mind when putting together a WIP report for your construction jobs.

1. Use the most recent data and record work that’s been completed

One of the most critical things to keep in mind when creating a WIP report is ensuring all elements are accurate. Contract information, costs, progress and change orders should all be as up to date as possible.

It’s also important to know how much work has been completed for a job. With WIP reports that are built around completed work rather than unfinished work, it’s easier to see when project productivity is lacking and where there could be a potential for going over budget.

2. Determine how much of the project is complete

When precise financial information isn’t accessible, you can use real-time reporting and historical data to determine trends. This will allow you to more accurately calculate how much of a project has been completed.

3. Estimate the cost for remaining job timeline

The last step is to figure out how much it will cost to finish a project. This should include factors such as labor, materials and unplanned expenses. Real-time construction WIP reports take daily updates from the field and use them to ensure accurate cash flow and profitability across jobs.

The best, most efficient method for creating a WIP report is through a project management software with integrated reporting features.

Here’s what you can do with Buildertrend’s WIP reporting feature

Right now, many of you are probably creating WIP reports manually using Excel, which means updating and correctly calculating every field separately. Keeping the numbers updated is a daily process, and because life is busy, it’s nearly impossible to make updates in real time.

Buildertrend users can implement the WIP report by adopting all other financial tools within Buildertrend. And by using these financial features, you’ll ensure accurate numbers, financial growth and continued success for your construction business.

Buildertrend is the leading residential construction management software. Since 2006, builders have been using our platform to stay on top of costs, supplies, staff and more in one convenient place – and take on more projects without adding paperwork and stress.

Here are three ways Buildertrend’s WIP feature will ensure an accurate bottom line for all your construction projects.

No more guessing games

Cash flow is key to success for not only your projects, but for your company as well. You can’t leave something as important as your profitability to chance. It’s important to know how much money is coming in and how much is going out on a day-to-day basis.

If you’re still gathering and preparing data manually to produce a WIP report, you know it not only takes considerable time, but it also leaves you with just another Excel document to manage. Manual processes are good for some things, but not when it comes to your finances. So many things can easily get overlooked, especially when keeping track of dozens of jobs.

Avoid the red

Buildertrend WIP reporting provides you with at-a-glance over billings and under billings for your clients, so you can initiate timely construction draw requests. And did we mention that you’ll be able to view your profit margin, percent to complete, cost to complete and job running total?

You can see the data that shows you where you stand on each project and take action to improve your margins. Buildertrend’s WIP reporting capabilities are also great when you’re in a hurry. You’ll have the ability to collect and manage data from across all your jobs in one high-level, easy-to-read view.

Save time and increase productivity

We could all use some saved time in our day. And with saved time comes increased productivity. At Buildertrend, we’re all about providing you information and data that allows you to know where you money is going and empowers you to make better business decisions that grow your business.

The Buildertrend WIP reporting tool will provide you with accurate high-level financial information that improves the way you bill customers, pay trade partners and achieve the desired profit margins for every project.

Work smarter, not harder

Stop managing countless spreadsheets that are out-of-date in a matter of hours and start using the near real-time data with Buildertrend’s Work in Progress report feature. If you’d like to learn more about WIP reporting and how to implement it into your business, reach out to your account executive.

If you’re new here and think Buildertrend’s WIP report could help with managing your business, schedule a demo today.

WIP reporting FAQs

Work in progress for project accounting is the total accumulated costs or revenue on a project that’s still in progress. Actual project costs and revenue for hours and expenses are tracked to understand the financial status of a job.

A construction work in progress report can be analyzed in near real-time through a comprehensive report. You’re able to see accurate data for total construction billings, profit margins and cost to complete on individual jobs or all in-progress jobs.

According to Viewpoint, construction accounting departments use spreadsheets for 59% of their processes, and project managers use spreadsheets for 45% of their work. This means, more often than not, project financials are being tracked manually.

Managing spreadsheets can be great for some things, but not for constantly changing data on construction WIP reports. Manually entered data is not only outdated minutes after it’s updated, but it can also lead to other problems like:

  • Human error in data updates
  • Unnecessary double entry
  • Inconsistencies in information

All of these issues can be avoided with Buildertrend’s WIP reporting software. Updates are made in real time with the latest information, so you always know where each project stands.

When it comes to your construction WIP reports, you want to find a balance. A high WIP report can mean your team is working on too much at once and not meeting their project deadlines. On the other hand, a low WIP report means too many things are sitting without progress due to issues like third-party delays.

Using WIP reporting software can ensure you’re always where you need to be. Check the status of each project regularly and make adjustments as needed before it’s too late.

About The Author

Chelsea Cole headshot

Chelsea Cole Chelsea Cole is a senior content marketing specialist at Buildertrend

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