Work in progress (WIP)

Work in progress (WIP) is a construction accounting report that compares each open project's billings to its costs and percent complete, in order to surface over-billings and under-billings. For every job it lines up the contract value, estimated total cost, cost to date, percent complete and billed to date; if you have billed more than the work you've earned, you are over-billed (billings in excess of costs), and if you've done work you haven't billed, you are under-billed. Persistent under-billing is a classic warning sign of unapproved change orders, cost overruns or slow invoicing, while over-billing means you are working with the owner's cash. Sureties, lenders and CPAs read the WIP schedule as the single best indicator of a contractor's project financial health.

Related term: Job costing