The monthly scramble
It is month-end and the accountant is trying to prepare the WIP. Someone is looking for a signed contract. A PM has an updated estimate, but no one can find it. The superintendent and the PM don’t agree on the status of some open change orders.
Eventually the report gets finished, but next month everyone goes through the same scrambled routine.
The process of putting a WIP report together can tell you a lot about your business operations, not just about your jobs. The recurring frustrations of preparing a WIP report can show you where information gets lost, responsibilities and expectations are unclear, and work depends too heavily on individual memory.
Overhead penalties
If you have to ask a PM where a contract is, you have a file organization problem.
I’ve seen many contractors where each PM has their own filing system. They have their own way of setting up the folders, naming their files, and handling version control issues. Each system makes sense to its creator—but others may need to ask for directions.
Sometimes you find three copies, and nobody knows which one to use.
If basic questions about a job require an interruption, a search, and—at times—someone to get back to their computer, then you’ve got a situation that is costing you precious overhead. The more complex your business is—and the more it grows—the more costly these overhead penalties become.
The solution can feel like bureaucracy at first, but it doesn’t have to be complicated. Pick one folder structure that every job uses. Pick one way to name files, including how to mark versions. Using dates often does not suffice. A date doesn’t necessarily tell you what version a file is or whether the underlying document has been finalized. Write the policy down and hold everyone to it.
Expect some resistance. A PM who has used their own system for years won’t love being told to change it, and the first few weeks will feel like extra steps.
Once it sticks, though, the difference shows up fast. The accountant finds the signed contract without sending an email. A new PM can open a job they’ve never worked on and know where to look. The current estimate is clearly identified and saved where everyone expects to find it, with earlier versions kept separate. The interruptions drop off, and so does the frustration that came with them.
That’s overhead you get back every month, not just at WIP time.
Current costs, old math
Look down the estimated cost column on many WIP reports and you’ll often find jobs whose numbers haven’t moved since they were bid.
The day you bid the job was the day you knew the very least about the job. Every day since has given you more information about how the job is going. Most of that information is sitting somewhere, in the PM’s head, in the field, or even in the job cost reports. It just hasn’t made it into an updated estimate.
Updating the estimate is how you capture what the job has taught you since you bid it.
Your actual costs may be current, but if the estimate still reflects assumptions the job has outgrown, you’re using old math. That can distort the revenue and profit reported on your WIP and leave you making cash flow and staffing decisions based on an outdated picture of the work remaining.
The detail behind an updated estimate helps you determine what labor, materials, equipment, and subcontractor work you still need. Combined with the project schedule, it helps you plan when you’ll need those resources and the cash to pay for them.
Give someone responsibility for reviewing that forecast before each monthly WIP. The number doesn’t have to change every month, but someone should be able to explain why it still holds.
The fog of scope
At certain points on a job, it can be hard for a contractor to say what the contract amount is. The PM may include change orders they expect to get approved. Accounting may use the original contract plus signed change orders. Each number makes sense to the person holding it. The WIP report can only use one.
In my experience, when a team has questions about the contract amount, they also have questions about scope. What work can be billed separately, and what work will be absorbed by the job? When those answers aren’t clear, work that should have been billed often gets absorbed instead. That confusion, the fog of scope, costs contractors money.
Start by keeping one change order log for the job. Each change should show what work is involved, the price, its approval status, and where to find the supporting documentation. Assign someone to keep it current and follow up on unresolved items. Before the monthly WIP, the PM and accounting should review it together so they understand what’s included in the contract amount and what’s still pending. If the superintendent is directing extra work in the field, there also needs to be a clear way for that information to reach the person tracking changes.
Catch it upstream
All of these issues show up at WIP time, but none of them starts there.
The next time your team prepares the WIP, pay attention to what they have to chase down. If the same information is missing every month, decide who is responsible for providing it, where it belongs, and when it needs to be ready.
At Levvigo, we help contractors work through the process problems that surface during monthly WIP preparation—from inconsistent job files to estimate updates and change orders that never reach accounting.
If your team is chasing the same information every month, let’s talk about what’s getting in the way.
Learn more about our business operations consulting.
