A work in progress (WIP) schedule is the report that reconciles what a contractor has earned on each project against what it has billed. For every open contract it lines up the revised contract value, cost to date, estimated cost to complete, percentage complete, revenue recognised to date and amounts invoiced — then shows the gap. That gap, over-billing or under-billing, is where a Saudi contractor's real cash and margin position lives. It is the single most important report a construction company produces, and yet most contractors in the Kingdom still assemble it once a quarter in Excel, by hand, weeks after the period has closed. This guide covers what belongs in a WIP schedule, how to read the over/under-billing lines, how it maps to IFRS 15 as endorsed by SOCPA, a worked SAR example, and how an ERP with proper cost codes and IPC billing produces the whole thing automatically.

What a WIP schedule actually is

A WIP schedule is a one-row-per-project table covering every contract that is open at the reporting date. Each row answers three questions: how much of this job have we actually done, how much have we recognised as revenue for doing it, and how much have we invoiced the client. Sum the rows and you get the contract asset and contract liability balances that appear on the balance sheet, plus the revenue and cost of revenue that appear in the income statement.

It is not a project report and it is not an accounting report. It is the bridge between them. Operations owns the estimated cost to complete; finance owns the cost to date and the billing. If the two sides never sit in the same table, nobody knows whether the company is making money until the last job closes — by which point it is far too late to do anything about it.

For a Saudi contractor the schedule carries extra weight. Revenue on a project is driven by certified progress that a consultant approves, VAT is charged on the invoice you actually issue and clear through ZATCA, retention (ضمان أعمال) is held back for a year or more, and advance payments are recovered progressively. None of those move in step with each other. The WIP schedule is the only place they are forced to reconcile.

The columns, and what each one has to mean

A schedule with the wrong definitions is worse than none at all, because it looks authoritative. Fix the meaning of each column before you build it:

Original contract value — the signed award, excluding VAT. Keep VAT out of the entire schedule; it is a collection item, not revenue.
Approved variations (أوامر تغييرية) — only change orders the client has approved in writing. Claims and pending variations sit in a separate memo column and are not recognised until approval is probable and measurable.
Revised contract value — original plus approved variations. This is the denominator for everything downstream.
Cost to date — all cost charged to the project's cost codes: subcontractor certified work, materials consumed, direct labour with GOSI and end-of-service loading, plant and equipment hire or internal charge-out, and site overhead. Cost incurred but not yet invoiced by the subcontractor must be accrued, or percentage complete is understated.
Estimated cost to complete (ETC) — the operations team's honest view of what remains. This is the only genuinely judgemental number in the schedule, and it is where most WIP reports go wrong.
Estimated cost at completion (EAC) — cost to date plus ETC. Compare EAC to the original budget and you have the margin erosion figure that matters most.
Percentage complete — cost to date divided by EAC under the cost-to-cost input method. Where output measures are more faithful (surveyed quantities, milestone completion), use those instead and say so.
Revenue recognised to date — revised contract value multiplied by percentage complete.
Billed to date — the cumulative value of progress invoices (IPC / مستخلص) issued, gross of retention and before deducting advance recovery, excluding VAT.
Over-billing / under-billing — billed to date minus revenue recognised to date. Positive is over-billed (a contract liability); negative is under-billed (a contract asset).

How over-billing and under-billing expose the business

Over-billing means you have invoiced ahead of the work. It funds the job, and a modest, deliberate front-load is normal and healthy — mobilisation and advance payments produce it by design. The danger is that over-billing is borrowed cash. It has to be earned back with future work that carries cost but generates little new invoice value. A contractor whose portfolio is heavily over-billed and whose new-award pipeline is thin is looking at a cash cliff, not a strong balance sheet. If the bank balance looks comfortable while the WIP schedule shows a large net over-billing, the comfort is temporary.

Under-billing is the more common and more damaging condition in the Kingdom. It means you have done work you have not invoiced. The causes are almost always operational: variations executed on a verbal instruction and never formalised, a monthly IPC submitted late, a consultant certifying less than was claimed, or quantities measured on site that never reached the billing team. Under-billing is a direct, silent loan from the contractor to the client, and it usually sits alongside a payment cycle that is already long.

There is a third signal, and it is the one experienced controllers look at first: a sudden movement in the over/under position on a single project between two consecutive months, with no corresponding change in billing. That almost always means the ETC moved — someone finally admitted the job costs more than planned. A profit fade of that kind, caught in month four, is recoverable through variation claims and procurement changes. Caught at handover, it is simply a loss.

IFRS 15 as applied in Saudi Arabia

Saudi Arabia applies IFRS as endorsed by SOCPA, so IFRS 15 governs contract revenue for entities reporting under the full framework, with a separate standard for small and medium entities. The WIP schedule is, in practice, the working paper behind IFRS 15 compliance.

Construction contracts typically satisfy over-time recognition because the asset being created has no alternative use to the contractor and there is an enforceable right to payment for work performed to date. Progress is then measured by an input method (cost-to-cost, which is what the WIP schedule computes) or an output method (surveys of work performed, units delivered). Whichever you choose has to be applied consistently and disclosed.

Two mechanics matter for the schedule. First, uninstalled materials: goods delivered to site but not yet installed inflate cost to date and overstate progress under a naive cost-to-cost calculation. IFRS 15 requires an adjustment so that such materials generate zero margin — they are excluded from the progress measure and revenue is recognised only to the extent of their cost. Second, contract asset versus receivable: an under-billed balance is a contract asset because the right to payment is conditional on future certification, whereas an issued and certified IPC becomes a receivable. Retention withheld on a certified invoice is generally a receivable, not a contract asset, because the amount is already earned and only the timing of payment is deferred.

Also note what is not revenue. An advance payment received against a bank guarantee is a contract liability until recovered against certified work. Loss-making contracts require the full expected loss to be provided immediately, not spread across remaining months — the WIP schedule is what makes such a contract visible early enough to disclose it properly.

A worked example in SAR

A contractor is building a warehouse and offices in the Second Industrial City in Dammam.

Original contract: SAR 24,000,000. Approved variations to date: SAR 1,800,000. Revised contract value: SAR 25,800,000. The original budgeted cost was SAR 20,400,000, giving a tendered margin of just under 21 percent on the original scope.

At the end of the eighth month, cost to date is SAR 13,600,000. Operations reassesses the remaining works — a rebar price increase, additional dewatering, and two extra months of site staff — and puts estimated cost to complete at SAR 8,900,000. EAC is therefore SAR 22,500,000.

Percentage complete is 13,600,000 divided by 22,500,000, or 60.4 percent. Revenue recognised to date is 25,800,000 multiplied by 60.4 percent, or SAR 15,583,200. Cost of revenue is the SAR 13,600,000 already incurred, so gross profit to date is SAR 1,983,200. Forecast margin at completion has fallen from 21 percent to 12.8 percent (25,800,000 less 22,500,000, over 25,800,000) — a profit fade of roughly SAR 2,100,000 that no cash report would show.

Certified IPCs to month eight total SAR 14,200,000 excluding VAT, gross of the 10 percent retention withheld and before advance recovery. Billed to date of 14,200,000 against revenue recognised of 15,583,200 gives an under-billing of SAR 1,383,200 — a contract asset. Retention withheld across those certificates is SAR 1,420,000, and the unrecovered balance of the 15 percent advance is a separate contract liability.

Read together the picture is unambiguous. The project is under-billed by SAR 1.38 million, is holding SAR 1.42 million in retention, and has quietly lost roughly SAR 2.1 million of forecast margin. Cash collected to date says nothing about any of this. Two actions follow immediately: formalise and submit the outstanding variation work so billing catches up with progress, and revisit procurement on the remaining rebar and finishing packages before the ETC hardens further.

Monthly close discipline

A WIP schedule is only as good as the cadence behind it. Quarterly WIP is a compliance exercise; monthly WIP is a management tool. A workable close for a mid-sized Saudi contractor runs on a fixed calendar:

The most important rule is the one that is hardest to enforce: the person who owns the ETC must be the person accountable for delivering it, and their number must be recorded and compared to the prior month. When ETC is a plug that finance calculates backwards from a desired margin, the WIP schedule stops being information and becomes decoration.

Days 1 to 3 — cut off subcontractor certifications and site material consumption; accrue everything received but not invoiced so cost to date is complete.
Days 3 to 5 — project managers submit an updated estimated cost to complete for every open cost code, with written commentary on any movement over a set threshold.
Day 6 — post payroll allocations including GOSI and end-of-service accruals to the projects, and charge plant and equipment usage at agreed internal rates.
Day 7 — issue the WIP schedule and review project by project: percentage complete, margin movement versus last month, and over/under-billing.
Days 7 to 10 — convert findings into action: submit late IPCs, formalise verbal variation instructions, escalate claims, provide in full for any contract now forecasting a loss.

Why the spreadsheet version keeps failing

Almost every contractor starts with Excel, and the schedule breaks for the same reasons every time. Cost to date is pulled from a general ledger that was never coded by work package, so job costing has to be rebuilt manually each month. Committed cost — issued purchase orders and awarded subcontracts not yet invoiced — lives in procurement emails and never reaches the accrual, so cost to date is understated and percentage complete looks better than it is. Billed to date comes from a separate invoice register that may not agree to what was actually certified. Approved variations sit in the project manager's folder. By the time the file is reconciled, the month it describes is six weeks gone.

The structural fix is not a better template. It is having one system where the cost code is the shared key: budget by cost code at award, purchase orders and subcontracts committed against the same codes, supplier invoices and payroll and equipment charges posted to them, and IPC billing generated from the same BOQ lines that the budget was built from. When those exist in one place, the WIP schedule stops being a report someone prepares and becomes a query someone runs.

Producing WIP automatically from your ERP

In IntellaQ Flow the WIP schedule is derived, not assembled. Contract value and approved variations come from the contract record. Cost to date aggregates from the job costing ledger, which already holds actual and committed cost by cost code, so accruals for received-not-invoiced work are automatic rather than remembered. Estimated cost to complete is entered by project managers directly against cost codes and versioned, which means the prior month's estimate is always available for comparison and profit fade is visible as a trend rather than a shock.

Billed to date reads from progress and IPC billing, so certified amounts, retention withheld and advance recovery are already separated — no reconciliation between an invoice register and what the consultant actually approved. Because those IPCs are the same documents cleared through ZATCA Phase 2, the VAT treatment and the revenue treatment are consistent by construction rather than by cross-check. Uninstalled materials are flagged at the cost-code level so they can be excluded from the progress calculation as IFRS 15 requires. FlowAI can then be asked plainly — which projects moved more than two points of margin this month, which are under-billed against certified progress — and answer from the same underlying data.

The broader capability set this sits inside, including BOQ and tender management, subcontractor and retention control, procurement, plant cost and WPS payroll, is covered on our construction ERP page at /industries/construction/. WIP is the report that ties all of it together: it is the single view where estimating discipline, procurement control and billing performance either add up or visibly do not.

WIP Reporting for Saudi Contractors: The Full Guide