Work in Progress (WIP) Reporting 

Your WIP Schedule Is the Surety's Real-Time View Into Your Business

If your financial statements are the foundation of your bonding capacity, your work-in-progress schedule is the dashboard. It tells the surety exactly what you have going on right now: which projects are active, how they are performing financially, how much of your bonding capacity is being used, and whether your jobs are making or losing money.

A clean, accurate, current WIP gives the surety confidence that you have a handle on your project economics. It demonstrates that you know where you stand on every job, that your costs are under control, and that your capacity is being used responsibly. That confidence translates directly into higher bonding limits and faster approvals.

A sloppy, outdated, or inaccurate WIP does the opposite. It tells the surety that you may not have a clear picture of your own operations, and if you do not know where you stand, the surety is not comfortable extending more capacity.

At Grit Insurance Group, we review our clients' WIP schedules as part of every program review and capacity request. This page explains exactly what belongs on your WIP, how sureties use it, and how to make sure yours is working for you instead of against you.

What Is a Work-in-Progress Schedule?

A work-in-progress schedule is a financial document that lists every active project your company is working on and shows the financial status of each one. For contractors with surety bond programs, the WIP is a required part of the underwriting file and one of the first documents the underwriter reviews after your financial statements.

Each project on your WIP typically includes the project name and owner, the original contract amount (plus any approved change orders), the total costs incurred to date, the total billings to date, the estimated cost to complete, the percentage of completion, and the projected gross profit or loss on the job.

When all of these fields are accurate and current, the WIP gives the surety a detailed picture of your project performance and your available capacity. When they are not, the WIP creates more questions than it answers.

 How Sureties Use Your WIP Schedule

To assess available capacity. Your WIP shows the underwriter how much of your aggregate bonding limit is currently in use. If your aggregate limit is $8 million and your WIP shows $7.5 million in active bonded work on a cost-to-complete basis, the surety knows there is very little room for another project. If your WIP shows $4 million in active work with several projects nearing completion, the surety sees available capacity and is more likely to approve a new bond. Understanding your backlog relative to your aggregate limit is essential before you bid new bonded work.

To evaluate project profitability. The surety is looking at whether your jobs are making money. If your WIP shows consistent profitability across your project portfolio, the surety has confidence in your estimating and project management. If the WIP shows jobs with significant cost overruns, fading margins, or underbillings that suggest work is being performed but not billed, those are warning signs that the surety will investigate before extending more capacity.

To check consistency with your financial statements. Your WIP and your financial statements should tell the same story. If your financial statements show strong profitability but your WIP shows multiple jobs losing money, the underwriter sees a disconnect. If your balance sheet shows a certain level of receivables but your WIP shows significantly different billing numbers, the underwriter will question the accuracy of both documents. Consistency between your WIP and your financials is critical. Your CPA should be involved in preparing or reviewing your WIP to make sure the numbers reconcile.

Common WIP Problems That Limit Bonding Capacity

These are the issues we see most often when reviewing contractor WIP schedules.

The WIP is outdated. If your WIP has not been updated in more than a quarter, the surety is working from stale data. Projects that were 30% complete three months ago may be 70% complete now. Jobs that were profitable may have run into cost overruns. The surety cannot make good decisions from old information, and they will not increase your capacity based on a WIP they cannot trust.

Cost-to-complete estimates are not realistic. Some contractors underestimate their cost to complete, which makes their jobs look more profitable than they actually are. Sureties know this and look for it. If your cost-to-complete estimates consistently prove to be too low when compared against actual results on completed jobs, the surety will discount your projections and may reduce your capacity.

Jobs showing significant fade. Fade occurs when a job's projected profit margin declines over time. If a job started with a projected 15% gross margin and the WIP now shows it at 5%, the underwriter wants to know what happened. Some fade is normal. Significant fade across multiple jobs signals estimating problems or project management issues that directly affect the surety's confidence in your capacity.

Overbillings are excessive. Overbilling means you have billed the project owner for more work than you have actually completed. Some overbilling is normal in construction and is often a function of billing schedules and payment terms. But excessive overbilling, where billings are significantly ahead of actual progress, tells the surety that you are using project funds to finance your operations rather than funding work from your own working capital. This is a red flag.

Missing projects. Every active project should be on your WIP, whether it is bonded or not. Sureties want to see the complete picture of your workload because non-bonded work still consumes your resources, your cash, and your management attention. Omitting projects from your WIP undermines the surety's ability to evaluate your true capacity.

How Often to Update Your WIP

At a minimum, update your WIP quarterly. This gives the surety reasonably current data and aligns with most contractors' financial reporting cycles.

If you are actively pursuing capacity increases, bidding on larger projects, or managing a heavy backlog, monthly WIP updates are significantly more valuable. Monthly reporting gives the surety the most current picture of your project performance and available capacity, which speeds up the approval process when you need a new bond.

Some contractors only update their WIP at year end when they submit their annual financial statements. This is not enough. A year-end-only WIP means the surety is making decisions for 12 months based on a single snapshot. Projects come and go, margins shift, and capacity changes throughout the year. The more frequently you update, the more accurately the surety can assess your program.

Percentage-of-Completion Accounting and Your WIP

For contractors with bond programs, percentage-of-completion (POC) accounting is the standard method sureties prefer. Under POC accounting, revenue and costs are recognized proportionally as work progresses on each project, rather than all at once when the job is finished.

POC accounting ties directly to your WIP schedule. The WIP provides the data (percentage complete, costs incurred, billings to date) that drives the revenue recognition on your income statement. When your WIP is accurate, your POC-based financial statements give the surety a reliable picture of your financial performance at any point during the year.

If you are currently using completed-contract accounting or cash-basis accounting, your financials may not reflect the true financial position of your business at any given time. Sureties generally prefer POC because it provides more timely and accurate information. Transitioning to POC accounting is a conversation to have with your construction-focused CPA, who can evaluate whether the switch makes sense for your business and how to implement it properly.

How to Build a Strong WIP Schedule

A strong WIP schedule is accurate, current, and easy for the underwriter to read. Here is how to build one that supports your bonding program.

Include every active project. Bonded and non-bonded. Public and private. Large and small. The surety needs the complete picture.

Use realistic cost-to-complete estimates. Do not pad them, but do not underestimate them either. Base your estimates on actual job cost data, not wishful thinking. If a job is running over budget, reflect that honestly. The surety will find out when the job is complete, and a pattern of inaccurate estimates damages your credibility.

Show change orders separately. If a project has approved change orders that increase the contract value, show the original contract amount and the change order amounts separately. This gives the underwriter a clearer picture of the project scope and how it has evolved.

Reconcile with your financial statements. Your WIP totals should tie to your balance sheet and income statement. If they do not, fix the discrepancy before you submit. Your CPA should be reviewing the WIP as part of their financial statement preparation.

Format it clearly. Use a consistent, professional format that the underwriter can read quickly. Column headers should be labeled clearly, numbers should be easy to follow, and the schedule should include totals and subtotals. Our WIP Template gives you a ready-made format to follow.

When Your WIP Raises Red Flags

If your WIP shows problems, do not try to hide them. Address them proactively with your bond agent before the surety sees them.

If a job is losing money, explain why and what you are doing about it. If several jobs show fading margins, provide context. If your backlog is approaching your aggregate limit, outline which projects are nearing completion and when capacity will free up.

Sureties understand that construction is not a perfect business. Jobs go sideways. Costs run over. Owners change scope. The surety's concern is not that problems exist. Their concern is whether you know about them, whether you are managing them, and whether they threaten your ability to perform on bonded work.

A contractor who presents a WIP with problems and a plan to address them earns more trust than one who presents a clean-looking WIP that turns out to be inaccurate. Honesty and transparency are always the right play. This is the Grit Standard in action.

 Why Contractors Hit Bond Limits 

 Building an Underwriting File