# What Sureties Read in a Work-in-Progress Schedule URL: https://mycontractorsinsurancequote.com/insights/what-sureties-read-in-a-wip-schedule Updated: 2026-10-29 · Reviewed by the Principal, Gleason Insurance Brokers, LLC Publisher: My Contractors Insurance Quote, a website of Gleason Insurance Brokers, LLC A surety reads a work-in-progress schedule to test whether a contractor's estimates hold up: it compares contract value, estimated cost, cost to date and billings on every open job, then checks whether gross profit is shrinking as jobs near completion. Overbillings and underbillings show how cash and earned revenue line up, and a pattern of margin fade usually weighs more than one strong year. The schedule carries the most weight when it ties to CPA-prepared financial statements and every change from the last schedule has an explanation. ## Key Decision Points - The WIP is where a surety tests the estimating and project controls behind the financial statements. - Gross profit fade from schedule to schedule is the pattern underwriters weigh most heavily. - Large or persistent underbillings prompt questions about unapproved change orders and cost overruns. - A WIP that reconciles to the CPA statements and explains every fade reads as a controlled business. - Better schedules support the conversation; no schedule guarantees a bond or a capacity figure. ## Why the WIP Carries So Much Weight in Surety Underwriting A surety bond is a credit relationship, not an insurance policy. The surety promises the obligee that the contractor will perform and pay, and the contractor and its indemnitors promise to repay the surety for any loss. The SBA's surety bond guarantee program describes the threshold the same way: a small contractor must meet the surety company's credit, capacity and character requirements. The underwriter's job is to judge whether the contractor can finish every open job profitably, not to price a pool of expected losses. Year-end financial statements show where the company stood on one date. The work-in-progress schedule shows how it got there and where it is heading: each open contract, what the company expects to earn on it, how far along it is and whether the profit it bid is still there. Because most construction revenue is recognized as work progresses, the WIP is also the support behind the revenue, the contract assets and the contract liabilities on the balance sheet. A surety that trusts the WIP can usually trust the statements built on it. For the bond types, indemnity agreement and public works statutes behind these requests, see [how construction surety bonds and underwriting work](https://mycontractorsinsurancequote.com/construction-surety-bonds). ## The Columns an Underwriter Reads First Formats vary, but most WIP schedules carry the same core columns for each open job. Contract value is the original contract plus approved change orders. Estimated total cost is the project manager's current forecast to finish, not the bid estimate. Estimated gross profit is the difference. Cost to date is what the job has cost through the schedule date, and percent complete is usually cost to date divided by estimated total cost. Earned revenue follows from percent complete multiplied by contract value. Billings to date are what the company has invoiced. The gap between the two is the over or under billing. Remaining columns show the revenue still to earn (the backlog) and the gross profit still to recognize. Underwriters often add their own column comparing today's estimated gross profit on each job with the figure on the prior schedule and at bid. Pending change orders deserve their own line or footnote. Including unapproved change orders in contract value raises percent complete and profit on paper, and an underwriter will ask whether the owner has agreed to them. - Contract value: original contract plus approved change orders - Estimated total cost: current forecast to complete, updated by the project manager - Cost to date and percent complete: the measure of progress on cost-based schedules - Billings to date: invoiced amounts, compared with earned revenue - Backlog: contract revenue not yet earned, with the gross profit still to come Each bonded subcontract or work order is its own line on the schedule; how those bonds are triggered and counted is explained in [bonding subcontracts and work orders](https://mycontractorsinsurancequote.com/construction-surety-bonds/subcontract-performance-and-payment-bonds). ### Illustrative scenario: Texas Utility Contractor's Mid-Year WIP A water and sewer contractor in the Houston area has four open city pipeline jobs bonded under Texas Gov. Code ch. 2253 and wants to bid a larger regional utility contract. Its June WIP shows three jobs close to bid margin, but the fourth, a 60-inch trunk line replacement, carries a large underbilling and an estimated margin unchanged since bid even though crews hit unmapped utilities and groundwater for two months. Before sending the schedule, the controller has the project manager re-forecast the trunk line, records the expected fade, separates two pending change orders the city has not approved and adds notes explaining each. The surety still asks hard questions, but it is reviewing numbers it can reconcile to the prior schedule. ## Overbillings and Underbillings: What Each One Signals A job is overbilled when billings exceed earned revenue. Moderate overbilling is common and often healthy, because it means the contractor is collecting ahead of its costs. Underwriters still check that the cash from overbillings is on the balance sheet rather than spent, since that cash is owed back to the job as work is performed. Overbillings that are large relative to working capital, without matching cash, can signal that one job is funding another. A job is underbilled when earned revenue exceeds billings. Some underbilling is normal at month end or when billing schedules lag progress. Large or persistent underbillings get closer attention because they often mean one of three things: unapproved change orders the owner may not pay, cost overruns that have been recorded as progress or a cost estimate that has not been updated. Each of those can turn into a fade or a loss when the job closes. Expect an underwriter to ask, job by job, why any significant underbilling exists and when it will be billed and collected. A short written answer in a notes column usually helps more than a verbal explanation after the fact. Cash tied up in underbilled work also affects how promptly subcontractors are paid; see [payment bond exposure on bonded jobs](https://mycontractorsinsurancequote.com/construction-surety-bonds/payment-bonds). ## Gross Profit Fade: The Pattern That Matters Most Fade is the decline in a job's estimated gross profit between the bid, earlier schedules and completion. A job bid at a healthy margin that finishes at half that margin has faded. Some fade is ordinary: weather, a slow owner or a subcontractor default. What underwriters look for is the pattern. If most jobs fade, and especially if they fade late, the problem is usually estimating or project controls rather than bad luck. Late fade is the most concerning version. A job that shows its full bid margin until it is 90 percent complete and then loses it suggests the estimate to complete was not being updated. Underwriters often compare the completed contracts schedule with prior WIP schedules for the same jobs to see how far margins moved and when. Jobs that gain margin as they close can also prompt questions about whether the original estimates were padded. When a job is expected to lose money, CPAs generally record the full expected loss when it becomes evident rather than spreading it over the remaining work. A WIP that shows a troubled job still carrying a profit is a credibility problem that can affect the whole submission. Fade on bonded work is ultimately a performance question; see [what a performance bond secures if a job goes bad](https://mycontractorsinsurancequote.com/construction-surety-bonds/performance-bonds). ## Backlog, Working Capital and the Aggregate Program Backlog tells the surety how much uncompleted work the company is carrying. Underwriters set that figure against working capital and net worth, and they look at the remaining gross profit in backlog as a source of future earnings. A large backlog with thin remaining margin can concern an underwriter more than a smaller backlog with steady margin, because the company has to finish all of it with the capital it has. Mix matters as well. Backlog concentrated in one owner, one project type or a new state adds risk the underwriter will want explained. So does backlog that includes unbonded private work, since a surety supporting the bonded jobs still depends on the company finishing the rest. For civil and underground contractors, equipment debt and the age of the fleet often come into the discussion because they compete with working capital. None of this produces a published formula. Sureties weigh the WIP alongside character, experience and the strength of the indemnity, and the outcome on any single request depends on the surety's own review. Equipment-heavy balance sheets bring their own questions; see [surety and insurance for civil and underground contractors](https://mycontractorsinsurancequote.com/who-we-serve/civil-underground-utilities). ## How the WIP Fits with CPA-prepared Financial Statements Sureties generally want the WIP to tie to the year-end statements: total earned revenue, contract assets for underbillings and contract liabilities for overbillings should match the balance sheet and income statement. Many CPA firms that serve contractors prepare or test a year-end WIP and include a schedule of contracts in progress and completed contracts as supplementary information. When the internal WIP and the CPA's version differ, the underwriter will ask why. The level of CPA work matters. A review engagement, performed under the AICPA's Statements on Standards for Accounting and Review Services (AR-C 90), is common for contractors with moderate bonding needs. An audit generally involves independent testing of balances and contract estimates that a review does not, and sureties commonly ask for audited statements as programs grow. Compiled or internally prepared statements usually support only smaller programs. Ask the surety which level it expects before engaging the CPA for the year. Interim schedules matter between year ends. Many sureties ask for a quarterly or semiannual WIP, and a contractor that sends one before being asked tends to have an easier conversation when a larger bid comes up. For how bonding fits a GC's broader program, see [insurance and bonding for general contractors](https://mycontractorsinsurancequote.com/who-we-serve/general-contractors). ## Preparing a WIP Schedule Before a Bond Request Start with current estimates. Have each project manager update the cost to complete on every open job as of the schedule date and sign off on it. Reconcile cost to date to the general ledger and billings to date to receivables and invoices. Separate approved change orders from pending ones and note the status of each pending claim. Then read the schedule the way an underwriter would. Compare every job's estimated gross profit with the prior schedule and the bid, and write a one-line explanation for any significant movement. Flag jobs with large underbillings and state when they will be billed. Show completed jobs since the last schedule with their final margin. Send the WIP with the financial statements, a bank line summary and the aging of receivables and retention, so the surety reviews one consistent package. Federal work adds a formal layer. The Miller Act requires performance and payment bonds on federal construction contracts above its threshold, with a surety satisfactory to the contracting officer, and federal bonds are written by companies on Treasury's Circular 570 list. A clean WIP will not change those rules, but it shapes how the surety responds to the request. The same year-end package often feeds the insurance renewal; see [timing an insurance renewal with year-end statements](https://mycontractorsinsurancequote.com/resources/contractor-insurance-renewal-and-changing-brokers). ## Before You Ask for a Quote ### What to Gather - A current WIP schedule with project manager sign-off on each estimate to complete - The prior two WIP schedules and the completed contracts schedule since the last year end - Year-end CPA statements at the level the surety expects, plus the most recent interim statements - A list of pending change orders and claims with their status and amounts - Receivables and retention aging and a summary of the bank line and its availability - Backlog by owner, project type and state, including unbonded work ### What to Ask the Insurer or Surety - Which level of CPA statement does the surety expect at our current and target program size? - How often does the surety want an interim WIP, and in what format? - How does the underwriter treat pending change orders in contract value? - Which jobs on our schedule draw the most questions, and why? - Does unbonded private backlog count against the aggregate program? - What would the surety want to see before supporting a contract larger than our history? ## Broker Notes **Quick Answer:** Sureties read a WIP schedule to test a contractor's estimates: they compare each job's current margin with prior schedules and the bid, examine over and under billings and check that the schedule ties to CPA-prepared statements. **Common Mistake:** Leaving the bid margin in place on a troubled job until it closes. Late fade suggests weak project controls and can undercut confidence in the entire submission. **Broker Perspective:** A broker reviews the WIP before it goes out, asks for explanations of every fade and large underbilling and makes sure it reconciles to the statements the surety will receive. **Coverage Impact:** A clear, reconciled WIP can support a surety's willingness to extend credit, but bonding capacity typically depends on the surety's full review and is never assured by any schedule. ## Questions Buyers Ask ### Why does the surety care more about our WIP than our revenue growth? Revenue shows volume, while the WIP shows whether the work is profitable and whether estimates hold up. A company growing quickly with fading margins can be a greater credit risk than a smaller one finishing jobs at bid margin. Underwriters use the WIP to judge whether the company can complete everything it has already taken on before they consider adding more. ### Is being overbilled on a job a bad sign to an underwriter? Not necessarily. Moderate overbilling often means the contractor is collecting ahead of its costs, which supports cash flow. Underwriters check that the cash is still on hand, because it is owed back to the job as work is done. Overbillings that are large compared with cash and working capital can suggest one job is funding another, which draws questions. ### Should pending change orders be included in the contract value on our schedule? Many sureties prefer contract value to include only approved change orders, with pending ones listed separately and noted. Counting unapproved changes raises percent complete and profit on paper, and if the owner never agrees, the job fades later. Ask your surety and CPA how they want pending items shown and keep the treatment consistent from schedule to schedule. ### Do we need audited financial statements to get bonded? It depends on the program size and the surety. Smaller programs are often written on reviewed or even compiled statements, while larger single and aggregate programs commonly call for audits. Ask the surety which level it expects before engaging your CPA for the year, because changing levels after the year closes can delay a submission. ### How often should a contractor send an updated WIP to its surety? Many sureties ask for a WIP at year end and again quarterly or semiannually, and some ask with each large bond request. Sending one on a regular schedule, with notes explaining changes since the last version, keeps the underwriter current and avoids a rushed review when a larger bid comes up. ## Official Sources 1. [SBA Surety Bonds (Surety Bond Guarantee program)](https://www.sba.gov/funding-programs/surety-bonds), U.S. Small Business Administration. Small businesses must meet the surety company's credit, capacity and character requirements; SBA guarantees bid, performance and payment bonds Verified 2026-10-23. 2. [40 U.S.C. §3131 (Miller Act bond requirements)](https://www.govinfo.gov/content/pkg/USCODE-2023-title40/html/USCODE-2023-title40-subtitleII-partA-chap31-subchapIII-sec3131.htm), U.S. Government Publishing Office. Performance and payment bonds required before award of federal construction contracts above the statutory threshold, with a surety satisfactory to the contracting officer Verified 2026-10-23. 3. [Department of the Treasury Circular 570 (approved sureties for federal bonds)](https://www.fiscal.treasury.gov/surety-bonds/circular-570.html), U.S. Department of the Treasury, Bureau of the Fiscal Service. Circular 570 lists the companies that write or reinsure federal bonds Verified 2026-10-23. 4. [AICPA SSARS No. 25 (amends AR-C 90, Review of Financial Statements)](https://www.aicpa-cima.com/resources/download/aicpa-statement-on-standards-for-accounting-and-review-services-no-25), AICPA & CIMA. Review engagements on financial statements are performed under the AICPA's SSARS, AR-C section 90 (Review of Financial Statements) Verified 2026-10-23. ## Related Decisions - [construction surety bonds](https://mycontractorsinsurancequote.com/construction-surety-bonds) - [performance bonds](https://mycontractorsinsurancequote.com/construction-surety-bonds/performance-bonds) - [subdivision improvement bonds for developers](https://mycontractorsinsurancequote.com/construction-surety-bonds/subdivision-improvement-bonds) - [general contractor bonding](https://mycontractorsinsurancequote.com/who-we-serve/general-contractors) - [infrastructure contractor bonding](https://mycontractorsinsurancequote.com/who-we-serve/civil-underground-utilities) --- Start a quote request: https://mycontractorsinsurancequote.com/get-a-quote · Call 844-978-7283 Contract and insurance reviews are a courtesy service that may be available at times, depending on our workload and on the size, timing and complexity of the project. A review is not guaranteed and is limited to insurance considerations. It is not legal advice and is not a substitute for advice from your own legal counsel, which you may need before signing a contract or obtaining coverage. Insurance and surety services are provided through Gleason Insurance Brokers, LLC. Site information is educational and does not constitute legal advice, a binder, an offer of coverage, a guarantee of eligibility or confirmation of policy terms. Insurance conditions are governed by actual issued policies; surety rights and obligations are governed by bond and indemnity documents.