How contractors can maximize their bonding capacity with a WIP schedule
April 30, 2026
UFG Insurance
Surety
Read Time: 2 min
By Erle Benton, AVP, Surety Contract Underwriting, UFG Surety
When it comes to securing bonding capacity, a construction company must provide a complete financial presentation to the surety, accurately reflecting their financial strength and operational stability. While several financial statements are included in the presentation, a document that carries significant weight is the work-in-process (WIP) schedule for open and completed contracts.
Related reading: How timely financial statements can help contractors maintain surety bond capacity
When it comes to securing bonding capacity, a construction company must provide a complete financial presentation to the surety, accurately reflecting their financial strength and operational stability. While several financial statements are included in the presentation, a document that carries significant weight is the work-in-process (WIP) schedule for open and completed contracts.
Related reading: How timely financial statements can help contractors maintain surety bond capacity
What is a work-in-process schedule?
A WIP schedule is a financial report that tracks costs, revenues and profitability of contracts. It is primarily used by construction companies to manage the progress and profitability of their long-term jobs and is presented on the last day of each month. There are two types that should be included in financial presentations:- Open WIP schedule lists the contracts in progress as of the statement date describing each project from inception until the statement date.
- Completed WIP schedule provides a list of the projects completed during the year, reporting the final contract price, total costs and earned gross profit for the entire job for the current year, as well as in prior years.
For sureties, the WIP schedule is indispensable in determining a construction company’s financial health. It’s the only document in a contractor’s surety financial presentation that clearly shows what has occurred, what is currently happening, and what the future looks like on a per-job basis.
Ideally, a WIP schedule will be prepared using the percentage-of-completion accounting method, which recognizes expenses and revenues as a project progresses. The financial data from a WIP schedule flows directly into the income statement and balance sheet.
What key items are shown in a WIP schedule?
When analyzing a construction company’s WIP schedule, surety underwriters focus on several key items:Gross profit — Surety underwriters closely monitor expected earned gross profit throughout the duration of the jobs. If the gross profit decreases or yields a loss, the underwriter will want to understand:
- Why costs exceeded original estimates?
- Was the issue isolated or widespread?
- Has management investigated the situation and taken action to address it?
If a contractor is unable to adequately answer these questions, it will impact an underwriter’s level of confidence in the account.
Underbillings — Large underbillings are shown on the balance sheet as a current asset and can be problematic as it means a contractor is not getting paid for work that has been completed. This might indicate potential project or cash flow issues. Depending on the size of the underbilling, it could have a major impact on the financial condition of the construction company.
Overbillings — Overbillings occur when a contractor is getting paid for work that hasn’t yet been completed. The surety underwriter will want to confirm that the extra cash is readily available to fund incoming project expenses. Using overbilling cash for new equipment, real estate or large bonuses can cause a major obstacle when securing bonding capacity.
Overbillings — Overbillings occur when a contractor is getting paid for work that hasn’t yet been completed. The surety underwriter will want to confirm that the extra cash is readily available to fund incoming project expenses. Using overbilling cash for new equipment, real estate or large bonuses can cause a major obstacle when securing bonding capacity.
The takeaway: A well-prepared, accurate WIP schedule can significantly enhance a contractor’s bonding capacity. Conversely, a poorly documented or unreliable WIP schedule can limit it.
Does a WIP schedule act as a crystal ball?
While a WIP schedule is often viewed as a crystal ball for job profitability, it’s important to ensure that the schedule is presented in a conservative manner to support projections.
A key metric on the schedule for both sureties and contractors is the unearned gross profit (i.e. anticipated gross profit minus earned gross profit to date), which is then compared to the anticipated overhead for the year. If a minor amount of the overhead is covered, the contractor will likely be aggressive in their bidding to secure new projects and complete them during the year. If a large portion of the overhead is covered, the contractor can pick and choose the projects that fit them best.
A key metric on the schedule for both sureties and contractors is the unearned gross profit (i.e. anticipated gross profit minus earned gross profit to date), which is then compared to the anticipated overhead for the year. If a minor amount of the overhead is covered, the contractor will likely be aggressive in their bidding to secure new projects and complete them during the year. If a large portion of the overhead is covered, the contractor can pick and choose the projects that fit them best.
Why does the WIP schedule matter?
At its core, the WIP schedule demonstrates how effectively a construction company estimates jobs, controls costs and manages projects. Because it plays such a critical role in determining bonding capacity, contractors are encouraged to work with a construction-oriented CPA to prepare it — in support of this, UFG Surety customers have access to our preferred network of construction accountants.
When prepared properly, a WIP schedule provides unmatched insight into the financial performance of a construction company’s many projects — information that is not only important for successfully running a business but also for earning the confidence of surety partners.
Ultimately, construction companies should view the WIP schedule as an essential tool in their toolbox that can maximize their bonding capacity and position them to compete for larger projects down the road to support their long-term growth.
When prepared properly, a WIP schedule provides unmatched insight into the financial performance of a construction company’s many projects — information that is not only important for successfully running a business but also for earning the confidence of surety partners.
Ultimately, construction companies should view the WIP schedule as an essential tool in their toolbox that can maximize their bonding capacity and position them to compete for larger projects down the road to support their long-term growth.
At UFG Surety, we are proud to support the growth and success of the construction industry. From single bonds to large bonded programs, turn to our team for responsive, trusted and knowledgeable service and a commitment to collaborating on solutions to get the job done.
The information provided is for informational purposes only. Every attempt is made to ensure that the information is accurate; however, it is not intended to replace professional advice. For more information, see Disclaimers & Other Legal Documents.