The following content is sponsored by Trimble. Construction work-in-progress (WIP) reports are essential for sound financial and project management decision-making. Contractors often finance most of the work on a project upfront, getting paid by the project owner in phases as work milestones are completed. Jobs that take longer than expected could run over budget if hourly labor costs or last-minute punch list items get too extensive. This can eat into contractors’ cash reserves, and they may have to use loans, credit, or capital to finance project completion. 

Lack of timely, accurate data on construction projects due to a mix of manual processes and legacy software systems that still take human hours to crunch the numbers can lead contractors to overbill or underbill their projects. Both can have consequences that lead to profit fade.

Overbilled projects mean that contractors might bill too early based on actual work. They might not be getting all that they’re owed once later project changes and unforeseen cost overruns are factored in. Underbilling can mean that contractors are slow to bill against work done, or do not include all of the actual labor, equipment, or material costs for that phase of the project. These can occasionally include unapproved change orders (COs) as well, which might be contested. 

As essential as timely and accurate construction data is to WIP, many companies struggle to achieve it and lack a true, real-time picture of the status of their projects — and how to correctly bill them.

Yet, all hope is not lost. Today’s modern, connected construction technologies coupled with WIP-smart strategies are helping contractors turn the tide. Here are five ways to master a modern construction WIP report.

1. Upgrade Construction Tech to Work With Real-Time Data

Are you still using spreadsheets to track projects? Unfortunately, they’re outdated, clunky, and prone to errors due to poor data entry and diminished accuracy from multiple authors editing the same sheet. People might enter the same information twice in different places or fail to report a critical detail, leading to budget shortfalls. One missing zero can throw off the whole project.

However, the right connected enterprise resource software solution can keep you on track. These cloud-based platforms utilize a single set of data updated in real-time as work occurs. Construction accounting professionals can streamline their WIP reporting and auto-update reports with new information when it comes to not just billing correctly, but also identifying where potential problems may occur and taking immediate action to avoid additional profit fade.

2. Connect & Collaborate With All Necessary Team Members

Though the accounting department generally handles WIP reporting, the strongest construction companies make WIP a group effort. Another benefit of using a modern, connected construction software suite is that it brings all project stakeholders together in collaborative working spaces. That means getting regular data and updates from the project manager, field teams, equipment managers, purchasing department, and more. The more accurate data is shared in a timely fashion, the more realistic WIP reports will be.

And it’s not just about pulling together the information. Bring teams together regularly to study and learn from WIP data. Have regular meetings that discuss what the data is showing and what can be done to collectively work together to solve any project challenges identified. 

3. Focus on Work Completed First

Estimating the labor hours necessary to complete a job is one of the trickiest aspects of construction project management. Multiple factors can delay productivity, from infectious disease — consider the recent pandemic — to dissatisfaction with working conditions and interpersonal conflicts. There’s no guarantee that the labor hours you’ve assigned to project phases will map out correctly in real life.

That’s why many leading construction companies focus on the actual work completed rather than the work remaining. This provides tangible evidence of how labor hours, productivity, material and equipment usage, and more are stacking up as compared to the costs and expected pay, which helps contractors identify and correct weaknesses earlier in the project rather than later.

4. Understand the Cost of Completion

Once the completed work (and the accurate job costing for that work) has been gauged, the next step is to calculate the cost to finish the project and where potential gaps can be. What percentage of the work has been done to this point and how does that align with where the project was expected to be by this time? At this point, do the costs spent map out to where the project currently stands?

If there are significant gaps, then it’s time to pull project teams back together and evaluate what it will realistically take to get the rest of the job done. Will the company’s cash on hand cover the next phase’s expenses? Are there new challenges identified that will result in higher material costs, more labor and equipment hours, or other unplanned expenses? Getting ahead of this can help contractors work to create more informed, effective CO requests with the project’s owners to recoup those expenses and avoid eating these themselves.

5. Use Data to Capture Trends & Benchmarks

Creating more accurate construction WIP reports doesn’t just help the current projects being worked on, but they can be invaluable to overall project analysis.

Spotting common trends, tracking fluctuating costs over time, identifying productivity gaps, or creating new workflows that save time and money can all be ascertained by looking at the historical WIP data from past projects. Sure, no two construction projects are alike, but understanding how teams work in certain conditions at certain times, how well your machine assets are working, and more can give a predictive edge when it comes to accurately estimating and bidding on future projects.