Key outcomes
- Built a percentage-of-completion WIP schedule covering all active jobs
- Identified $340K overbilling on a single project that had hidden a 9-point margin shortfall
- Established monthly job-cost-to-budget review meeting with operations
- Bonding capacity increased after surety reviewed the new reports
The challenge
On paper, the GC was having a record year. Monthly P&L showed gross margin steady at 22%. But the owner couldn't reconcile it with what he was seeing day to day: payroll was harder to make, suppliers were calling, and the line of credit was tapping out earlier each month.
The books were technically 'closed' monthly — but the contractor's existing bookkeeper wasn't producing a WIP schedule. Revenue was being recognized when invoices were sent, not when work was actually performed. On long-duration projects, this distorts both revenue and margin.
Our approach
We rebuilt the WIP schedule from scratch using percentage-of-completion methodology. For each of the 14 active jobs, we collected:
- Original contract value and approved change orders - Cost-to-date (labor, materials, subs, equipment) - Estimated cost-to-complete (refreshed monthly with the project managers) - Billings to date
From that, we calculated earned revenue, over/underbillings, and projected gross margin per job. The rebuilt WIP revealed that one large project — invoiced aggressively up front — was actually $340K overbilled and tracking to a 13% gross margin instead of the 22% originally bid.
We then established a standing monthly job review meeting where the controller, owner, and lead PM walk through every active job's WIP, cost-to-complete estimate, and remaining cash flow profile.
The outcome
The first reaction was uncomfortable — the company's true year-to-date earnings were materially lower than what the unadjusted P&L had suggested. But within a quarter, the new visibility paid for itself several times over: the owner renegotiated the underperforming project's remaining scope, tightened estimating on similar work going forward, and stopped over-distributing cash that hadn't actually been earned.
When the surety reviewed the next year's audited financials with the proper WIP schedule, the company's bonding capacity increased. And the cash crunch that had been hitting every month? It quietly disappeared once revenue and earnings were being recognized in the right periods.