Over/under billing (WIP) calculator

Contractors recognize revenue as the work gets done (percentage of completion, ASC 606 over time). Billing follows the schedule of values, so the two drift apart. The gap is over or under billing.

% complete       = cost to date ÷ estimated total cost
Earned revenue   = contract value × % complete
Over / (under)   = billed to date − earned revenue
Projected GP     = contract value − estimated total cost
GP margin        = projected GP ÷ contract value
GP to date       = earned revenue − cost to date

Reading the result

• Over billed (billings in excess of costs and estimated earnings) is a liability. You've been paid for work you still owe. Good for cash, but it can hide a fading job.
• Under billed (costs and estimated earnings in excess of billings) is an asset. You've done work you haven't billed. Persistent under billing often means unbilled change orders, a front-loaded cost, or an estimate that's too low.

Why the estimate matters most

Cost-to-cost is only as good as the estimated total cost. If the estimate is stale, % complete is inflated, earned revenue is overstated and under billing looks better than it is. Update cost-to-complete before you run WIP. If cost to date exceeds the estimate, this tool caps % complete at 100% and flags it.

Totals in multi-job mode are simple sums. Bonding and CPA schedules usually also show over and under billing separately (they are not netted on the balance sheet), which the footer row does.