Ask any surety underwriter what document tells them the most about a contractor, and most will not say the balance sheet or the income statement. They will say the WIP. Your work-in-progress schedule is where the health of your business shows up first — and it is the report that most directly drives your bonding capacity. If you understand how your surety reads it, you can keep yours clean and protect the capacity you have worked hard to build.
What a WIP Schedule Is
A work-in-progress (WIP) schedule is a report that lists every open contract you have and, for each one, shows a consistent set of numbers: the total contract value, the estimated total cost, the costs you have incurred to date, the percentage complete, the amount you have billed, and the resulting over- or under-billing. Add it all up and you have a live picture of your entire backlog on one page.
For most contractors, the WIP schedule is prepared on a percentage-of-completion basis. Revenue is recognized as costs are incurred, so a job that is 40% through its budgeted cost is treated as 40% earned. That method is what lets the surety — and your CPA — see how each job is actually performing rather than waiting until it closes.
The Columns That Matter Most
You do not need to be an accountant to read a WIP schedule, but you should know what each key column is telling your underwriter:
- Contract value: The current price of the job, including approved change orders. Keeping this current matters — unposted change orders distort every other number on the line.
- Estimated cost to complete: Your best estimate of what is left to spend. This is the number contractors most often get wrong, and the one underwriters scrutinize most.
- Cost to date and percent complete: How far along the job is, measured by cost.
- Estimated gross profit: Contract value minus total estimated cost. Watch how this moves quarter to quarter.
- Billings vs. earned revenue: Whether you are over-billed (billed ahead of the work) or under-billed (behind).
What Your Underwriter Is Really Looking For
When a surety reads your WIP, they are asking a handful of questions behind the numbers:
1. How much work do you already have on?
Your backlog — the revenue still to be earned across all open jobs — tells the surety how much of your capacity is already committed. A contractor who is 90% loaded has far less room for a new bonded project than one at 40%.
2. Are your jobs fading?
“Fade” is the industry term for gross profit that shrinks as a job progresses. If a job estimated at 12% profit last quarter is now projected at 6%, the underwriter wants to know why. Consistent fade across your WIP is one of the fastest ways to lose an underwriter’s confidence.
3. Is your billing telling the truth?
Heavy over-billing can make your cash position look stronger than it is, because you have billed for work you have not yet done. Underwriters adjust for this. A WIP that shows large billings in excess of costs and estimated earnings across many jobs invites hard questions about whether current cash is really tomorrow’s earned revenue.
How Often Sureties Want the WIP
The reporting rhythm depends on the size of your program:
- Annually with your fiscal year-end financial statement — the baseline for every account.
- Quarterly updates for most active contractors carrying an ongoing bond program.
- Monthly for larger programs, or when a surety is watching a particular job or a period of rapid growth.
Turning these around quickly and accurately is itself a signal. A contractor who produces a clean, timely WIP looks like a contractor who runs a tight shop — and that reputation is worth real capacity.
Common WIP Mistakes That Hurt Contractors
- Stale change orders. Work performed but not yet added to the contract value understates your revenue and can make a profitable job look like a loss.
- Optimistic cost-to-complete estimates. Underestimating remaining cost inflates current profit and sets up a nasty fade later. Underwriters have seen this pattern many times.
- Jobs that never close. Completed work left open on the WIP clutters the picture and raises questions.
- Inconsistent methodology. Switching how you calculate percent complete from period to period makes trends impossible to read.
- A WIP that does not tie to the financials. When the WIP and the financial statement disagree, the surety trusts neither.
Many of these overlap with the broader warning signs underwriters watch for — our guide to common underwriting red flags covers the full list.
How a Clean WIP Grows Your Program
A well-run WIP schedule does more than avoid problems — it actively builds capacity. When your jobs finish close to their estimated margins, quarter after quarter, you are proving to the surety that your estimating and project management are reliable. That track record is what justifies higher single and aggregate limits over time.
The WIP also works hand in hand with your working capital, which sureties use to size your program. Strong working capital plus a clean, honest WIP is the combination that moves contractors up the ladder — the same path we describe in how to increase your bonding capacity.
Work With Your CPA
The quality of your WIP schedule is closely tied to the quality of your accounting. A CPA who specializes in construction and understands percentage-of-completion reporting is worth far more than one who does not, because they will produce statements a surety trusts on sight. If you are aiming to grow into a larger program, this relationship is not optional — it is part of the foundation, as we explain in our guide to growing from a fast track to a standard bond program.
The Bottom Line
Your WIP schedule is not busywork for the surety — it is the clearest window into how your business is actually running. Keep your change orders current, be honest about cost to complete, close jobs when they finish, and make sure the WIP ties to your financials. Do that consistently and the WIP stops being something you dread producing and becomes one of the strongest arguments for expanding your program.
If you want a second set of eyes on your WIP before your next renewal, or you are ready to grow your bonding capacity, contact us today or call 877-914-0909. We help contractors present their story to the right surety and secure the capacity they need to grow.