Job Costing and WIP Reports for Contractors
Job costing answers one question: did this job make the money the estimate said it would? The WIP schedule answers the other: of the work done so far, how much has been billed? A contractor with both knows the business. One with neither knows the bank balance.
Job costing that matches the estimate
The report is only useful if it can be laid next to the bid. That means the cost codes in the books must be the lines in the estimate: not more, not fewer. The firm builds the list from how you actually estimate, whether that is six phases or twenty-six, and resists adding codes nobody will use. Every labour hour, material purchase, sub invoice and equipment charge is then posted to a job and a code, in the week it happens.
The monthly job cost report shows, for every open job: estimate, committed costs, actual costs to date, and variance, by code. A job running ten percent over on materials in week three is a conversation; the same job ten percent over at closeout is a loss.
The WIP schedule, explained
For each job: contract value including approved change orders, total estimated cost, cost to date, percent complete (cost to date over estimated cost), earned revenue (percent complete times contract value), billed to date, and the difference. Billed more than earned is a liability called billings in excess of costs; earned more than billed is an asset called costs in excess of billings.
Over-billing feels good and hides trouble: the cash is in, the work is not, and the end of the job will be expensive. Under-billing is the quiet killer: work done, invoices not sent, and a company that is profitable on paper and short of cash every Friday. The schedule shows both, by job, every month.
Who asks for it
Banks before a line of credit, sureties before a bond, buyers before an acquisition, and tax preparers applying contract accounting. Produced monthly it is a management tool; produced once a year under pressure it is an audit.
Change orders
Unbilled change orders are the single largest leak on most residential and light-commercial jobs. Your bookkeeper tracks approved change orders against each job so the contract value on the WIP schedule is current, and lists work-in-progress change orders that have been done but not yet approved or billed. If your field software tracks change orders, the books reconcile to it; if it lives in texts to the client, the monthly report asks the question.
Equipment and indirect costs
Owned equipment costs the job something whether or not anyone writes a check: depreciation, maintenance, fuel, insurance. Your bookkeeper can set an internal hourly or daily rate per machine and charge it to jobs, so a job that tied up an excavator for three weeks shows that cost and a bid can be checked against it.
Indirect costs such as the yard, the shop, small tools and supervision are either allocated to jobs by a rule or shown as a separate pool. Both are defensible; what is not is burying them in overhead so every job looks more profitable than the company.
What you need to provide
- The estimate for each job, in whatever form you produce it
- The signed contract or proposal, with the schedule of values if there is one
- Time by job and code, weekly, from the crew lead or your field software
- Approved change orders, as they happen
- Vendor bills and receipts coded to a job, or sent in with the job named
None of this is more than most contractors already have. The difference is that it reaches the books the same week rather than at year-end.
What it costs
Job costing and WIP reporting are part of the construction bookkeeping engagement rather than a separate service, and engagements start at $250 a month. The main driver is the number of open jobs and how many codes you estimate in. A company with three open jobs and eight codes is at one end; fifteen open jobs with committed-cost tracking is at the other.
If you have an estimate and a job you are not sure made money, send both. That is the quickest way to see what the report would have shown.
| Field | Example | What it tells you |
|---|---|---|
| Contract value incl. approved COs | $180,000 | What you will be paid in total |
| Estimated total cost | $144,000 | What you expect it to cost; margin 20% |
| Cost to date | $108,000 | Where you are |
| Percent complete | 75% | Cost to date over estimated cost |
| Earned revenue | $135,000 | 75% of contract value |
| Billed to date | $120,000 | What you have actually invoiced |
| Under-billing | $15,000 | Work done, not yet billed: an asset, and a missing invoice |
Common questions
Can I do job costing in QuickBooks Online?
Yes, on Plus or Advanced, using Projects for jobs and products/services or classes for cost codes. The guide on this site walks through the setup; the firm does it as part of the first month.
How often is the WIP schedule produced?
Monthly, with the standard package. On request between months when a lender or surety asks.
What if my estimates are rough?
Then the job cost report is rough, and that is still useful: it shows which lines you consistently miss. Over a few jobs the estimates get better because the report tells you where.
Do I need to track time by job?
For labour to be costed, yes. It can be as simple as a weekly sheet with job and hours per person; many field apps already capture it.
Is percentage-of-completion the method on my tax return?
That is for your tax preparer, and smaller contractors have other options under IRS rules. The books carry what any method needs; your bookkeeper prepares the year-end package accordingly.
Related services
- Construction Bookkeeping Services
- Contractor Bookkeeping for Trades and Service Companies
- Construction Payroll Services
- Construction Bookkeeping Cleanup and Catch-Up
Who we work with
Request a quote for job costing & wip
Tell us about the company and the state of the books. Your bookkeeper replies within one business day with a plain answer: what it would take, and what it would cost. Requests answered within one business day · Calls Mon–Fri, 9am–5pm Eastern Or call (888) 720-4009 if you would rather talk it through first.