The WIP report takes days every month
The report waits on late costs, unclosed books and managers who haven't reviewed their jobs.
The WIP report goes quickly when the steps ahead of it are done in order. The controller closes the books by the 10th, reconciled and balanced, so the numbers for that month and earlier months don't change. The PM turns the daily reports into percent complete per line item. The job cost to complete meeting follows on a dedicated day, usually the first Monday after the 10th. Then the controller and the PM keep the WIP current. Total contract price counts only fully executed change orders, and estimated total cost is updated each month from the cost to complete, not the number from bid day.
Three moves, in order
Step 07: Monthly cadence
Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month.
Other problems step 07 solves
Other things that go wrong
What owners ask
Why does construction WIP reporting take so long to complete?
The report waits on late costs, unclosed books and managers who haven't reviewed their jobs. The WIP report goes quickly when the steps ahead of it are done in order. The controller closes the books by the 10th, reconciled and balanced, so the numbers for that month and earlier months don't change. The PM turns the daily reports into percent complete per line item. The job cost to complete meeting follows on a dedicated day, usually the first Monday after the 10th. Then the controller and the PM keep the WIP current. Total contract price counts only fully executed change orders, and estimated total cost is updated each month from the cost to complete, not the number from bid day.
Which part of the system fixes this?
The step is number 07, monthly cadence. Weekly bookkeeping, cost to complete, and one CEO report, on the same days every month. It's drawn from chapter 7 of CONTROL: C.F.O.S. Construction Financial Operating System.
Is this normal for my trade?
Across the 48 trades that publish a figure, net profit at $1M to $5M averages 7% after taxes. If you're well under that and this page describes your month, the two are usually the same story. The published average tells you where the pack is, and your own job costing tells you where you are, which is the number that pays payroll.
Where do I start?
Close the books by the 10th so the costs stop moving.
Can I fix this without touching anything else?
You can try, and it doesn't hold. Step 07 depends on step 03, overhead calculation and step 04, estimating system and step 05, software and bookkeeping alignment and step 06, project management. Install it ahead of those and it produces numbers the field won't trust, which is worse than the problem you started with.
Wrote CONTROL, the 8 step system behind these figures. More about the author.