What is a WIP schedule?

A work-in-progress schedule is a job-by-job table of your open contracts showing, for each one, the contract price, costs incurred to date, estimated cost to complete, billings to date, and the resulting over- or under-billing. It is how a surety sees your live workload.

What is the difference between over-billing and under-billing?

Over-billing means you have invoiced more than the work you have actually earned, so the excess is effectively customer money you are holding. Under-billing means you have earned more than you have invoiced, so you are financing the job out of your own cash. Sureties watch both, for different reasons.

Why does under-billing worry a surety?

Because it consumes working capital. Heavy under-billing means your cash is tied up in work you have not invoiced, which is the position contractors are in right before a liquidity problem. It can also indicate billing discipline issues or disputed change orders.

Fade is the pattern of jobs finishing at a lower gross margin than they were estimated at. A surety tracks it across your history because it measures how reliable your own forecasting is, and unreliable forecasting is harder to underwrite than thin margins.

Do I include unbonded jobs on the WIP schedule?

Yes. Every open contract belongs on it. Unbonded work uses the same crews, supervision, and cash as bonded work, and a schedule showing only bonded jobs will not reconcile to your income statement.

The WIP Schedule Sureties Actually Read

Contract bonding, by the numbers

10%: Minimum bid security on California public works; CA Public Contract Code
$150,000: Federal contract size that requires performance and payment bonds; Acquisition.gov (FAR 28.102)
~80%: New U.S. construction businesses that survive their first year; U.S. BLS
$8.6B: U.S. surety direct written premium; SFAA, 2022

What the columns are

A usable WIP schedule has one row per open contract and, at minimum, these columns:

Contract price, including approved change orders. Pending change orders are shown separately or footnoted, never quietly folded in.
Estimated total cost, and therefore estimated gross profit.
Cost incurred to date.
Estimated cost to complete — the judgement call, and the one that matters most.
Billings to date, from which the over- or under-billing falls out.

Percent complete is normally cost incurred divided by estimated total cost. Multiply that by the contract price and you have earned revenue. Compare earned revenue to billings and you have the billing position. Every derived number traces back to your cost-to-complete estimate, which is why underwriters scrutinise it.

Over-billing and under-billing

Over-billed means billings exceed earned revenue. You are holding money for work not yet performed. Modest over-billing is normal and healthy for cash flow; heavy over-billing means future work has to be funded out of money already spent, and if the job stalls the shortfall lands on the surety.

Under-billed means earned revenue exceeds billings. You have done work you have not invoiced, so you are financing the owner. Underwriters treat sustained under-billing as a warning: it drains working capital, and it often means unapproved change orders or a dispute nobody has mentioned yet.

Neither position is automatically bad. What draws questions is a large swing on a single job, or a pattern across the schedule that does not match the story the questionnaire tells.

The estimate of cost to complete

This is the number a contractor controls entirely, and underwriters know it. Lower your cost-to-complete estimate and percent complete rises, earned revenue rises, and profit appears. It is the easiest figure on the schedule to be optimistic about.

Which is why sureties do not read it in isolation. They compare successive schedules. If a job's estimated cost to complete keeps holding steady while costs keep being incurred, the estimate is not being maintained. If jobs routinely finish over the estimate, your forecasting is unreliable, and an underwriter will discount every future estimate you give them accordingly.

Fade, and why it costs more than a bad job

Fadeis the gap between a job's estimated gross margin and the margin it finishes at. A single faded job is an event. A pattern of fade is a characteristic, and it is one of the few things that reliably shrinks a bonding program even when the balance sheet is fine.

The reason is simple: a surety extends capacity based on your projections. If your projections are systematically optimistic, then every capacity decision made from them is wrong in the same direction. Contractors who track and explain their own fade are treated very differently from contractors who appear not to have noticed it.

What makes a schedule credible

It ties to the financial statements. Earned revenue on the WIP should reconcile to revenue on the income statement, and the billing positions should appear on the balance sheet.
It is current. A schedule as of a quarter ago describes a workload you no longer have. Currency is a scoring factor, not an administrative preference.
It includes everything. Bonded, unbonded, small jobs, and the awkward one. Omissions are found when the numbers fail to reconcile.
It carries notes. A one-line explanation on the job with the strange billing position answers the question before the underwriter has to ask it.

If your WIP is the weak point

Many contractors bid well and build well and simply have not kept this document. That is a bookkeeping problem, not a bonding disqualification, and it is worth fixing before a surety sees the file rather than after. If cash flow rather than record-keeping is the constraint, funds control is designed for exactly that, and the SBA program asks for the same schedule on its own form.

Send us a current schedule and your statements and we will tell you what an underwriter will stop on. Start a contract bond quote, or read how a performance bond gets placed. Underwriting always applies and we never promise guaranteed approval.