WIP reporting explained

Your accountant says you made money, the bank looks fine, and you still cannot say which jobs are profitable. Work in progress (WIP) reporting fills that gap. It shows where each job stands on cost and margin, alongside what has been invoiced and paid.

What it is

A WIP report lists every open job and compares two things: how much you have claimed from the customer, and how much of the job you have actually built. It does that with a handful of numbers per job:

• contract value, including approved variations
• cost to date
• cost to complete (your current estimate of what is left to spend)
• forecast margin (contract value less total forecast cost)
• amount claimed so far

From those you work out how far through the job you are, what the work done so far has earned, and whether you have claimed ahead of the work or behind it.

Why it matters to a builder

Building income arrives in lumps at claim stages, while costs go out every week. A simple sum of revenue minus costs for the month mixes the two up. The Good Builder says a small to medium builder can see a $1 million swing on the P&L from one month to the next without adjusting for work in progress.¹

The swing goes both ways. If you have paid trades and suppliers but have not invoiced the stage yet, the month can look like a loss when the job is fine.² If you have claimed ahead of the work, the bank looks healthy, but part of that money is the customer’s, paying for work you have not done yet. A New Zealand builder warns that new home builders can go broke slowly while cash looks healthy for exactly this reason.³

Money in the bank is not profit until the work it pays for is built. WIP tells you how much of it is already spoken for.

How it works in practice

A common approach is the cost method. Divide cost to date by total forecast cost (cost to date plus cost to complete) to get percentage complete. Multiply that by the contract value to get the revenue earned so far. Compare that with what you have claimed.

As an illustration only: a job with a $600,000 contract and a forecast total cost of $480,000 has spent $240,000, so it is 50% complete and has earned $300,000. If you have claimed $360,000, you are $60,000 ahead of the work. That $60,000 is already committed to finishing the job. If you have claimed only $250,000, you are $50,000 behind, and the P&L will look worse than the job is.

Cost to complete is the number that makes or breaks the report. If it is stale, the margin looks fine until the job is nearly done. Without job-level cost to complete and margin drift, you are guessing.⁴ Update it from your back-costing each month, and a job running two per cent under margin at halfway can still be recovered. Found at final account, it cannot.⁵

A practical routine:

1. Close off costs for the month and make sure every invoice is coded to a job.
2. Have the supervisor or estimator update cost to complete for each job.
3. Produce the WIP report and add it to a one page monthly dashboard alongside margin, overheads, net profit, cash at bank and variance to forecast.⁶
4. For any job where forecast margin has dropped, decide what to do now: a variation, a conversation with the customer or a change on site.

Common confusion

“My accountant does that”

Your accountant may adjust for WIP at year end, but that is too late to fix a job. One builder notes that apprenticeships rarely teach cash flow, WIP and financials, so many builders leave it to the accountant.⁷ You need the report monthly, and you need to understand it.

WIP is not a cash forecast

WIP tells you whether jobs are making money. A cash forecast tells you when money moves. You need both. A business can be profitable on WIP and still run short of cash between claims.

Licensing rules can depend on it

In Queensland, the QBCC Minimum Financial Requirements include keeping current assets above current liabilities, and a profit picture that ignores WIP can make that harder to judge.² Other states set different financial requirements for licensed builders, so check with your own regulator and accountant.

Where to next

Pair this with How to build a 13 week cash flow forecast so you can see both profit and timing. For the other numbers worth tracking each month, see Top 10 numbers to track in a building business.

Footnotes

1. The Good Builder, “Builder 2 Builder: Thoughts on running a building business”, The Good Builder, 2025. https://thegoodbuilder.com.au/builder-2-builder-thoughts-on-running-a-building-business/ ↩

2. The Good Builder, “5 essential accounting tips for builders”, The Good Builder, 2025. https://thegoodbuilder.com.au/5-essential-accounting-tips-for-builders/ ↩ ↩²

3. Caleb Adams, “Running A Business Is Like Getting Punched In The Face”, Better Builder Podcast, 2025. https://www.youtube.com/watch?v=MJhAxFreuc4 ↩

4. The Good Builder, “Builders, Tech and the ‘One Portal’ Promise: A Candid Chat with Ryan Lee from Evolve Automation”, The Good Builder, 2025. https://thegoodbuilder.com.au/builders-tech-and-the-one-portal-promise-a-candid-chat-with-ryan-lee-from-evolve-automation-2/ ↩

5. The Good Builder, “Why Good Builders Still Lose Money”, The Good Builder, 2026. https://thegoodbuilder.com.au/why-good-builders-still-lose-money/ ↩

6. The Good Builder, “Margin Before Motion: How Understanding Your Numbers Builds Freedom”, The Good Builder, 2025. https://thegoodbuilder.com.au/margin-before-motion-how-understanding-your-numbers-builds-freedom/ ↩

7. The Good Builder, “Cash Flow is King: Lessons from a Builder Who Survived 50-Years Strong”, The Good Builder, 2025. https://thegoodbuilder.com.au/cash-flow-is-king-lessons-from-a-builder-who-survived-50-years-strong/ ↩