Tips for Creating a Strong Work in Progress (WIP) Report

Updated November, 2024

Managing an architecture or engineering firm is complex. As a firm leader you have to balance big picture decisions with the details of managing individual projects. Imagine how much easier your day-to-day work life would be if you had a clear view of the status of each project all in one place. Now, imagine if you could easily answer “how much money is it going to take to finish this project?” This is possible if you have a successful work in progress (WIP) report set up.    

Your work in progress report is an integral part of your business operations and should be regularly reviewed by the firm's leadership team, probably with the project managers as well. It’s the tool that gives you a full look into all of your projects and what money is left on your contracts.

How do you create an insightful work in progress report for your fir and what should be included in the report? We will explore what does into a WIP report and how to use it effectively in this post. And of course you can use tools like BQE CORE to analyze your firm's data and automate reports like WIP and others. 

What is a Work in Progress Report? 

Whether you’re already using a work in progress report, you’re only somewhat familiar with the term, or you have no idea what it means, it's important to cover the basics so we are all on the same page. Let’s take a deeper look into what it is, what is included, and most importantly, how it helps you make better business decisions.   

A work in progress (WIP) report shows the billable time and expenses your team has completed but not yet invoiced for, on a project. For example, you have already invoiced for the work completed last month, but this month your team has put in another 100 hours on a project. The WIP report would show the value of that additional effort - the value of the 100 hours worked on the project but which hasn't yet been added to an invoice to the client. 

It is basically a projection of the amount that will be on the next invoice to each client. 

Often firms will have these reports automated to show a list of all active projects and the WIP in both hours and dollar value, to help firm owners, office managers, and/or project managers project future invoice amounts. This metric can also be aggregated together, and tracked as an asset on your balance sheet and as projected revenue on your income statement.  

A WIP report not only tells project managers how far along work is currently - showing the total amount invoiced to date, the total amount of work that has been completed and not yet invoiced, and the amount remaining on the contract, but also can be a resource to use if your firm needs a line of credit or loan.   

A WIP report is used for various key performance indicators (KPIs), but mainly to:  

• Get the team on the same page in terms of the billing process 

• Make sure the team, especially the Project Manager and firm Principals, knows where the job/project stands financially. 

• Review the total amount invoiced to date
• Show the remaining amount for the contract

• Monitor for cash flow 

• Project anticipated revenue for the next billing cycle
• Update clients with the current state of the project and status of the agreed fees.

Why is a WIP Report Important? 

A WIP report is an essential part of financial project management and helps you keep an eye on your resources. It allows you to see what work has been done and paid for, what work has been completed but not invoiced yet, and how much revenue is left in your contract. All vital numbers to deliver projects on budget. It also can illuminate if a project is under-billed or over-billed.

If a project is under-billed, you are invoicing for time that has already been spent, meaning cash will flow in after the work is completed. An under-billed project means your business ends up being responsible for financing the project. You are taking on risk of doing the work but not getting paid for it until a future date. It is important to keep good client relationships to ensure you are able to invoice and collect payment for work after it is completed. 

If a project is over-billed, this means the work happens after the invoices have been sent - the time is lagging behind the cashflow. In this case your client ends up financing the project. It means you are asking for payment up front and then doing the work after being paid. An over-billed project might not seem like an issue; however, this means the cash is front-loaded without accounting for cost overruns which in turn could become cash-flow problems by the end of your project.

The benefit of over-billed projects it that you don't have to worry about not being paid for the work since you already have collected the payment, but it does put pressure on your team to manage their time efficiently and not go over the payment amount. Overall, this should be your preferred way of working, but does necessitate careful project management. Under-billing is still a higher risk. 

A WIP report is the tool that shows you whether a project is over or under-billed before it gets out of hand. It is a critical tool for staying on top of your projects and keeping them profitable.  

Project managers that set up a strong WIP report can keep a detailed eye on progression and resolve any issues before they become a problem. It is best practice for all of your project managers and leadership team to review WIP reports regularly - even on a weekly basis. 

A WIP report can also help you calculate how to adjust financials to create a clearer picture while the project is still in progress. Since under-billings or over-billings can impact your reported revenue, you want to be as accurate as possible in your report so that:  

• Your firm’s finances are accurate  

• Your project's budget is accurate
• Your projections for future invoices is accurate

• You can adjust for projects that encounter unexpected issues or delays

• You are not over-reporting, therefore not harming your job profit

What to Include in Your WIP Report 

When putting together a WIP report, you want each row to represent a project. You may want to show all projects over a certain timeframe, or filter the list to only show active projects.

Most work in progress reports include a column for each of the total contract amount, total estimated costs, actual costs to date, cost to complete, percent complete, billed service revenue (actual amount of service revenue already invoiced), earned revenue (value of the time spent to date), the difference between the billed and earned revenue to show the over/under billings. Other columns in your report can include a backlog and remaining profit.

One number on the report that you want to be especially accurate is the cost-to-complete. If the cost estimate is even slightly off your entire WIP report can be misleading. The cost estimate and percent complete will be off, while the income statement and over/under-billings will be wrong. When incorrect, this can create unwelcome surprises and unrealistic expectations later in the project.  

Include Real-Time Data From Your Firm Management Software

For accurate WIP reporting, you need accurate data. Relying on manually updated numbers and spreadsheets is not going to give you a clear enough picture to review frequently. Using a project management platform for your WIP report that includes real-time visibility into your data will allow you use dynamic information pulled directly from your projects in real-time. This includes the actual costs, progress made, time reports, and change orders. 

Excel spreadsheets are a pain to use and can be too time-consuming and prone to human errors since they must be updated manually. They also require you to enter the same data in multiple locations or have to do a lot of copy and pasting to transfer data to the right place. This is not ideal when firm management software that keeps all of your data in one place is available to help streamline your operations.

For the best WIP reporting, cloud-based project management and accounting software can quickly gather, update, and share information and data in real-time for a smooth workflow that saves you and your team hours of work each week. You can also set up reports to be autogenerated and automatically sent to the right people so everyone has the information they need to make important project and business related decisions. 

Every architecture and engineering firm would benefit from firm management software that helps automate reporting functions. The time savings alone will more than offset the small cost of these software tools. While accurate data can help you ensure you are invoicing for all of the work you are doing - directly leading to higher profits. 

Track Completed Work Instead of Labor Costs 

It is beneficial to know the amount of work that has been completed on the project so far. Many labor-intensive projects base the percentage of work completed on actual work done instead of hours or labor costs.  

When your WIP report is based on the work the team has completed compared to the work remaining, this can provide early insight that job productivity is slipping and could run over budget. 

Follow these numbers carefully throughout the project. Review them weekly with both the firm leadership as well as the project team so everyone is aware of the progress and is updated if things go off track. Work togther as a team to troubleshoot issues to keep projects profitable and on schedule. 

Estimate Percent-Complete and Cost to Finish 

Exact financial data isn’t always readily available when you have disjointed systems or multiple software tools for different parts of the business. A project management platform that brings all aspects of firm management into one multi-functional tool can help you use real-time and historical data to identify trends and estimate the percentage of what is completed so far.

This software can become the command center of your firm, and be the place where all firm employees go to get the most complete information about their projects. Having a single platform that brings together project management, time management, resource management, scheduling, reporting, and financials will be a tremendous benefit to your firm. You will be able to have real-time insights into all the areas of your business including being able to see how much time and revenue is left in each project. 

It will save time, give you more accurate data, and help you invoice for all of the work completed. This will increase performance, improve profitability, and take some of the stress and busy work of tracking financials off the shoulders of the leadership team. 

As we mentioned in the beginning of this article, one of the big questions a WIP report helps answer is “how much money will it take to finish the project?”   

In your reporting, make sure to track labor, materials, and other valuable resources needed to complete the project, along with adding a margin for error.   

When your WIP report is accurate and timely, your team can better manage billing and thus cash flow. A WIP report also clearly shows the project profitability and helps with accurate financial reporting and projections.  

Using modern project management software that helps you build your WIP report will help you identify and stop any financial losses. And setting up automations that deliver the report to the right people at the right time, saves time and allows for faster decision making. 

Partner With Your Project Managers 

Although the accounting team handles the firm's finances and budgeting, it’s still valuable that the project managers are involved with the WIP report and are able to see the current state of their projects. The numbers on paper are not always identical to what’s going on with a project and only the project manager will have this detailed insight to compare what's happening on the ground with what is showing up in the report. They are also the ones that can direct the project team to make changes or adjust the work plan to keep projects on track financially. 

Everyone knows that plans on a project can change whether the costs go up, more labor is needed, clients cause unexpected changes, or there are disputed change orders.   

If the accounting team isn’t made aware of these changes or updates to the agreement, then the estimated cost-to-complete will not accurately compare to billing expectations. If change orders are unreported, the project appears under-billed. This results in lower profits.   

Overall, everyone will end up with a very different project on paper than what the team sees in real life. This is why it is vital to partner with the project managers to review your WIP report. Project managers are experts when it comes to knowing the real-time costs, and the minutia of the day-to-day management of their projects. They are your partners on keeping projects on track and profitable. 

A spreadsheet might make it look like the job is complete, but a project manager using accurate management software for their WIP reporting will know what stage the project is always in and what is needed for completion. 

Sharing information is one of the common attributes of successful businesses. Be transparent with your reporting and project budgeting. Not only with your project managers but with your full firm. Transparency build trust, builds loyalty, and makes people better professionals. Beyond just sharing reports and data, make sure you educate your team on what the reports say and how to interpret the data they get to see. 

Improve Your Project Profitability with BQE CORE 

Building a WIP report can be relatively easy with the right tools in place. When you have the right project management software available, you and your team can create a valuable WIP report, track time and expenses, and more, so that you remain in complete control of your project and see high profits in the end.    

Request a free demo today to see just how BQE CORE helps architects, engineers, and other professional services firms easily manage their projects and build powerful WIP reports.