Construction work in progress: the monthly review behind project reports

Start with signed contract value and approved changes. Identify pending claims or change orders separately. Management may expect to recover them, but that expectation needs review before it enters accounting or a cash forecast.

Use one project identifier across purchasing, payroll, billing, and reporting. A cost assigned to the wrong job can distort two projects while the company total still looks correct.

Reconcile job costs to payroll, supplier bills, equipment, subcontractors, and other direct records. Check invoices received after cutoff for work performed in the period.

Ask the project owner for a dated cost-to-complete estimate. Explain changes in labor, materials, scope, schedule, and rework. The accountant should assess the reporting method and any loss or estimate treatment under the applicable framework.

Show billed amounts, cash received, retainage, and the relevant accounting revenue or contract balances. A progress invoice is not by itself evidence of the accounting completion measure.

For illustration, a project billed $200,000 with $20,000 retained has a different collection schedule from one paid in full, even if both have the same approved billing. Track the release conditions and expected date.

Discuss unapproved changes, disputed bills, stalled milestones, missing receiving records, and unusual margin movements. Give each issue a project owner and accounting reviewer where needed.

Do not offset one project's unexplained balance against another. Keep project-specific evidence so a consolidated number can still be traced.

Retain contract values, changes, cost detail, remaining-cost estimates, billings, collections, retainage, and the review conclusion. Preserve revisions rather than overwriting the prior month's assumptions.

Use recurring discrepancies to improve purchasing and project reporting inputs. A useful WIP review tells management which jobs need action and gives accounting an explained basis for the monthly figures.