Work in Progress (WIP) is a figure generally used to show progress and earned revenue on a project that is mid-stream.
Knowify uses this number to show you how far along you are on a project and how much of the contract value you have earned on a project before you have invoiced the client. Once you enable WIP in Knowify, may notice this number in the profitability charts in the Contract Jobs section.
In order to get a WIP value to show on your project, you will need two things:
- A fixed price contract – This is necessary so we can show a percentage of a whole fixed number. (Cost plus contracts show Unbilled instead.)
- A budget cost – We use the budget to track how far along the actual cost is versus. how high you expect it to be.
Both of these values are used in the WIP calculation, which is as follows:
The Actual Cost divided by Budget Cost represents Percentage of Completion, so you can see how far along you are. Then we use that value times the Contract Value shows the percentage of the contract you should be invoicing based on how much of your budget has been spent. Then, revenue that has already been billed is subtracted, so it does not double up your revenue.
A Negative WIP value shows that you have billed the client MORE than the Percentage of Completion times the Contract Value.