What is a work in progress schedule?

Definition

A work in progress schedule is a job-by-job worksheet that lines up cost incurred, revenue earned, and amounts billed on open contracts. On the books, it is a supporting schedule, not a ledger account you debit.

It explains the gap between what you have earned and what you have billed. That gap is what later sits as a job asset or a job liability on the Balance Sheet.

Each row is one job. The columns are the same on every row so you can add them up.

The schedule is not cash. It is a reading of open jobs at a date, usually month-end.

Where it shows up

Balance Sheet: Related to the over-billings or under-billings the schedule explains.

P&L: Related to revenue earned on open jobs.

Cash flow: Related to nothing sitting as an account.

See also: Percentage Of Completion · Over Billings · Under Billings

When you look at your Balance Sheet, you will not see this worksheet as its own line. You will see the over-billed or under-billed totals the last column explains.

When under-billings are high, you have earned more than you have billed. When over-billings are high, you have billed ahead of the work.

The Income Statement holds the earned column, not the billed column. A busy billing month can leave earned revenue unchanged if the jobs did not move.

On the Statement of Cash Flows, the schedule itself does nothing to cash. Cash from operations rises only when the billed amounts collect.

A remodeler can print a neat schedule and still be waiting on a draw. The worksheet is the comparison, not the bank balance.

How it works

A typical path starts with every open job. Closed jobs drop off; signed work not yet started may show zeros.

For each job you pull cost incurred to date. That is the cost-in column.

You then take the percent done, usually cost in divided by total estimated cost. That percent times the contract price is the earned column.

You pull amounts billed to date on that job. That is the billed column.

Subtract earned from billed, or billed from earned, depending on which is larger. If billed is higher, that job is over-billed; if earned is higher, it is under-billed.

Add the over-billed jobs into one total and the under-billed jobs into another. Those two totals are what the Balance Sheet is trying to show.

Stay on the worksheet. How you chose the percent, and how you sent a stage bill, belong on other pages.

If estimated cost changes, you refresh the percent and the earned column. Yesterday's printout is not this month's schedule.

If a job finishes, earned equals the contract price and the row should clear as final bills catch up. A finished job that still shows a gap needs a closer look.

Example

A kitchen remodeler has three open kitchens at month-end. The shop prints one row per job.

| Job | Cost in | Percent done | Earned | Billed | Over / under | | --- | --- | --- | --- | --- | --- | | Maple | $20,000 | 50% | $25,000 | $15,000 | $10,000 under | | Oak | $10,000 | 25% | $10,000 | $20,000 | $10,000 over | | Pine | $30,000 | 75% | $30,000 | $30,000 | $0 |

Maple has earned $25,000 and billed $15,000, so $10,000 sits under-billed. Oak has billed $20,000 and earned only $10,000, so $10,000 sits over-billed.

Pine is even. Earned and billed both read $30,000, so that row does not move the Balance Sheet totals.

The shop does not post a journal that says "work in progress schedule." The worksheet only explains the $10,000 under-billed asset and the $10,000 over-billed liability already sitting in the books.

If Maple's next draw of $10,000 goes out next week, the under-billed gap on that row should shrink. The schedule at this month-end still shows the $10,000.

Common mix-ups

This worksheet is not the same thing as percentage of completion. Percentage of completion is the percent that fills the earned column; this page is the full comparison.

This worksheet is not the same thing as a progress bill. A progress bill is one stage invoice; the billed column is the sum of those bills on the job.

This worksheet is not a cash report. Over-billed jobs can still be unpaid, and under-billed jobs have not even been invoiced yet.

Related terms

• Percentage Of Completion: Recognizing revenue in proportion to how much of a job is finished.
• Over Billings: Amounts billed on a job beyond the revenue earned so far.
• Under Billings: Revenue earned on a job that has not yet been billed.
• Job Costing: Tracking revenue and cost for each individual job, project, or order.
• Progress Billing: Invoicing a customer in stages as work is completed.
• Supporting Schedule: A detailed worksheet backing up a single line on the financial statements.
• Backlog: Signed work that has not yet been delivered or recognized as revenue.
• Retainage: A portion of a contract payment held back until the job is accepted.