What the report contains
Most WIP reports have one row per project, or per phase on large projects, with columns that move from what was done to what was billed.
- Contract value or budget.
- Earned to date: hours times rates on hourly work, contract value times percent complete on fixed-fee work.
- Billed to date.
- Unbilled (underbilled): earned minus billed, when positive.
- Overbilled: billed minus earned, when positive.
- Aging of the unbilled balance by how long ago the work was done.
Unbilled time on hourly projects
On time-and-materials work, unbilled WIP is simply approved hours not yet on an invoice, valued at the billing rate.
Worked example: 120 unbilled hours at $140 is $16,800 of unbilled revenue. If 30 of those hours were worked more than 30 days ago, $4,200 of it is aging and deserves a question: why was it not billed last month?
Overbilled and underbilled on fixed-fee projects
On fixed-fee work, the report compares earned value with billings. Underbilled means the firm has done more than it has invoiced; overbilled means it has invoiced ahead of the work.
- Underbilled: a $200,000 fee at 45 percent complete has earned $90,000. Billed to date is $80,000, so the project is $10,000 underbilled. That is cash the firm has earned and not asked for.
- Overbilled: a $60,000 fee at 50 percent complete has earned $30,000. Billed to date is $36,000, so the project is $6,000 overbilled. Only $24,000 of fee remains to cover 50 percent of the work.
Where percent complete comes from
The report is only as good as its percent complete. Two common methods are the project manager's estimate and effort spent against effort budgeted. Using both as a cross-check catches optimism early.
Worked example: the $200,000 project above budgeted 1,200 hours and has logged 540. Effort says 540 / 1,200 = 45 percent, which matches the project manager's estimate. If the manager had said 60 percent, the report would show $120,000 earned and $40,000 underbilled, a figure worth questioning before invoicing it.
How to act on the report
Review WIP before every billing run and again in the monthly project review. Each line should leave the meeting with an owner and an action.
- Large underbilled balance: bill it now, or find out what is blocking the invoice.
- Aging unbilled time: decide whether it is billable, needs a change order, or should be written down.
- Overbilled: hold further billing on the line until earned value catches up, and check the remaining fee covers the remaining work.
- Persistent write-downs on one client or one manager: look at scoping and estimating, not just billing.
Where Hubity fits
Hubity previews each month's invoices from approved time, expenses, retainers, and contract progress, then drafts them for a person to review and send.