Professional Documents
Culture Documents
The POC Calculation Underbillings Overbillings How to use our system reports Reconciling the WIP and P/L Constructing a P/L from just a WIP Cash Flow in WIP Analysis
Need the 4 basic WIP Figures Contract Price, Total Estimated Cost, Cost to Date, Billed to Date Can use Estimated Gross Profit or Cost to Complete Three step Process 1. Calculate percent complete 2. Calculate Total Earned on Project and Earned Gross Profit 3. Calculate Under/Over Billing
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Underbillings
Underbillings never come from something good! Contractor has not billed for the amount of cost and profit they have put in place Early stage Underbillings are sometimes explainable Late Stage Underbillings are nearly always an issue
Unapproved Change Orders Profit Fade not yet recognized
Overbillings
Can be an indication of deferred profit increases Can be a cash flow tool if used correctly
Becomes an issue if overbilled and heavily into
Also can indicate job cost system issues Can create Pure Job Borrow
Occurs when you have billed your entire profit before it is earned Looks at total billings and cost to date only, excluding earned profit If Billed to Date Cost to Date > Total Estimated Gross Profit, then there is pure job borrow If cash balances are low, then this is a much larger issue, as they will need the cash in the future
P/L Reconciliation