Every month we build a WIP schedule for the contractors we work with. Owners want it for the numbers: percent complete by job, over- and under-billings, projected margin, whether the backlog is as healthy as it looks. Those numbers matter, and we take them seriously. But the most valuable thing that comes out of the WIP process is usually not on the schedule at all. It is what we learn about how the company runs while we are trying to build it.
What a WIP actually requires
For every open job, a WIP line needs five things: the current contract value, the approved change orders, cost to date, the estimated cost to complete, and billings to date.
Cost to date comes out of the accounting system. If the job costing is clean, it is a report. The other four come out of people. The contract value and the change orders depend on what the PM has in hand and what the owner has actually signed. The estimated cost to complete is the PM's judgment about what is left on the job, informed by what the super is seeing in the field. Billings depend on what has been submitted, what has been approved, and what the PM believes is still owed.
So building the WIP means going to the project managers every month with the same set of questions for every open job. And how easy or hard those questions are to answer tells you more about a contractor's operations than the finished schedule does.
Where the friction shows up
On a well-run job, the answers come back in minutes. The PM pulls the change order log, confirms the contract value, updates the cost to complete from last month's number, and checks the billing against the schedule of values. Done.
On a job with problems underneath, the answers come back slowly, or they come back and then change. The contract value takes three emails to confirm because nobody is sure which version was signed. The cost to complete is a guess because the PM has not seen the latest sub invoices and does not know whether a big one is still coming. There is a change order the super says was approved in the field, but it is not in the log and accounting has never heard of it. Billings are a month behind the schedule of values because the pay app was waiting on backup that lives on somebody's phone.
None of those are math problems. Each one is a process problem that the WIP forced into the open. The number was hard to get because the process that should produce it either does not exist, or exists and nobody follows it.
Friction into fixes
This is where the operational suggestions come from. They are not a separate consulting engagement. They are a byproduct of doing the accounting carefully and paying attention to what it takes.
Because the WIP runs every month, the same friction shows up in the same places month after month. A PM who struggles with the cost to complete on a job in March will struggle with it on the same job in April and on a new job in June. Once a pattern repeats a couple of times, it is visible enough to name and specific enough to fix. We write it down, bring it to the owner, and talk through what a better process would look like.
Some of these fixes are small: a change order log that gets updated the day the CO is signed. Some are bigger: a cost-to-complete review between the PM and the super before every month-end close. Almost none of them are expensive. Most come down to deciding who does what, and when.
The most common one
If there is one pattern we see more than any other, it is scattered documentation. The information the PM needs usually exists. It is just spread across inboxes, phones, laptops, and conversations, and nobody ever agreed on where it was supposed to go. We wrote a separate post on that one, because the fix is simple and the payoff is large: [link to Post 1].
What this looks like in practice
Our monthly work with a contractor has three parts. We build the WIP and a brief management package. We sit down with the owners, and often the PMs, to walk through it job by job. And in that same meeting we raise the operational items that surfaced along the way and help decide which ones to fix first.
Over time, the WIP gets easier to build, because the processes that feed it get better. That is the point. The schedule is the output. The diagnostic is the value.
If your WIP schedule shows up every month and nobody talks to you about what it took to produce it, you are getting half of what it is worth. Book a call.
Get more from your monthly WIP process
Levvigo helps contractors prepare WIP, review job performance, and work through the accounting and process gaps behind the numbers. Learn more about our business operations consulting.
Book a call with Levvigo to discuss your WIP process and the support your team needs.
