How to read a WIP schedule: overbilling, underbilling and the questions to ask
By the Junction team · Published 24 October 2026 · 4 min read
The short answer
- A work-in-progress (WIP) schedule compares, job by job, what you have billed with what you have earned.
- Earned revenue = (cost to date ÷ estimated total cost) × contract value. Billed minus earned is overbilled (a liability) when positive and underbilled (an asset) when negative.
- Overbilling funds the job with the customer's money but can hide a problem; underbilling is cash you have earned and not yet collected. Both deserve a question.
If you run a contracting business you will have seen a WIP schedule, and probably been told to "watch the over/unders". This guide shows how the numbers are built, so you can read them with confidence and ask better questions of the data behind them.
What a WIP schedule shows
Each row is one open job. The usual columns are the contract value, the estimated total cost, the cost to date, the percentage complete, earned revenue, billings to date, and the over or under billing. Most contractors recognise revenue by the percentage-of-completion method, so earned revenue follows the cost incurred, not the invoices sent.
The arithmetic, with a worked example
- Percent complete = cost to date ÷ estimated total cost at completion.
- Earned revenue = percent complete × contract value.
- Over/under billing = billings to date − earned revenue.
| Job 1042 | Job 1037 | |
|---|---|---|
| Contract value | $1,000,000 | $600,000 |
| Estimated total cost | $800,000 | $500,000 |
| Cost to date | $400,000 | $300,000 |
| Percent complete | 50.0% | 60.0% |
| Earned revenue | $500,000 | $360,000 |
| Billings to date | $560,000 | $330,000 |
| Over/(under) billed | $60,000 over | $30,000 under |
Job 1042 has billed $60,000 more than it has earned, so that amount is an overbilling, shown as a liability: the customer has paid for work not yet done. Job 1037 has earned $30,000 more than it has billed, an underbilling, shown as an asset: work done and not yet invoiced. The figures are made up for illustration.
Bridgit's explainer on WIP reports gives the same definitions in words: an over-billed project is one where the contractor has completed a smaller share of the work than they have billed, and an under-billed one is the reverse, which can strain cash flow.
What to make of each result
| Result | What it often means | Question to ask |
|---|---|---|
| Modest overbilling | Front-loaded billing or deposits; the job is funded by the customer | Is the cost estimate still right, or is the job about to cost more than it will bill? |
| Large overbilling | Cash taken ahead of work; risk if costs rise or the job stops | Which jobs have overbillings above a set share of contract value? |
| Underbilling | Work done and not invoiced, often waiting on a change order or approval | Which underbilled jobs have unapproved change orders, and for how long? |
| Underbilling that keeps growing | Billing process behind, or earned revenue overstated by an optimistic cost estimate | Has the estimated total cost been revised this quarter, and by how much? |
Why the estimate matters most
Every figure above leans on the estimated total cost. If a job's true cost is rising and the estimate has not been updated, percent complete is overstated, earned revenue is too high and the job looks healthier than it is. This is why careful teams update the cost-to-complete forecast regularly and compare it with committed cost, which is money already promised to subcontractors and suppliers.
Questions to ask your data
Once your systems are connected to an AI assistant, the WIP schedule becomes something you can interrogate. Try these, and check the first answers against your own schedule:
WIP questions
- What is our over/under billing across all open jobs, largest first?
- Which jobs are overbilled by more than 10% of contract value?
- Which underbilled jobs have change orders waiting for approval?
- For job 1042, show cost to date, committed cost and estimated total cost side by side.
- Which jobs have committed cost above their estimated total cost?
For more, see our 40 construction questions cheat sheet. If your answer does not match your schedule, the cause is usually a definition (which jobs count as open, which cut-off date) rather than the arithmetic, so prepare the data first.
Frequently asked questions
- What is the difference between overbilling and underbilling?
- Overbilling means you have billed more than the work you have completed has earned; it is shown as a liability. Underbilling means you have earned more than you have billed; it is shown as an asset.
- How do you calculate over/under billing?
- Divide cost to date by estimated total cost to get percent complete, multiply by contract value to get earned revenue, then subtract earned revenue from billings to date. A positive result is overbilling and a negative result is underbilling.
- Is overbilling good or bad?
- It improves cash in the short term, but it can hide a job that will cost more than it bills, and it is a liability if the job stops. Treat it as a prompt to check the cost estimate, not as a profit.
- Can AI build a WIP schedule from my accounting system?
- An AI assistant can answer WIP questions if it can read your job-cost and billing data through a connector. Check its arithmetic against your own schedule first, and make sure the connector excludes payroll and personal data.
Sources
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