Over/Under Billing Calculator: Percent Complete for One Job

What over and under billing mean

On a job that bills as it goes, the amount billed and the work done drift apart. This calculator measures that drift for one job, using cost to cost: how much of the estimated cost has been spent tells you how much of the contract has been earned.

• Over billing is billed to date above earned revenue. The invoices are ahead of the work.
• Under billing is earned revenue above billed to date. The work is ahead of the invoices.
• If the two match, the job is billed even.

Only one of the two is ever above zero for a job, and the result plate shows whichever applies.

The formula, with job A and job B

Percent complete = cost to date ÷ estimated total cost

Earned revenue = contract amount × percent complete

Over billing = billed to date − earned revenue (when above 0)

Under billing = earned revenue − billed to date (when above 0)

Percent complete is rounded to four decimals (50.00% is 0.5000), the way our WIP schedule template does it, and earned revenue uses that rounded figure. The calculator opens on job A from the schedule. Job B is a second example to type in.

| Line | Job A | Job B | |---|---:|---:| | Contract amount | $480,000 | $125,000 | | Estimated total cost | $408,000 | $100,000 | | Cost to date | $204,000 | $80,000 | | Billed to date | $260,000 | $90,000 | | Percent complete | 50.00% | 80.00% | | Earned revenue | $240,000 | $100,000 | | Billed less earned | $20,000 over billed | $10,000 under billed | | Estimated gross profit | $72,000 | $25,000 | | Gross profit to date | $36,000 | $20,000 | | Cost to complete | $204,000 | $20,000 | | Backlog | $240,000 | $25,000 |

For job A, $204,000 ÷ $408,000 = 50.00%, and $480,000 × 50.00% = $240,000 earned. Billed $260,000, it is $20,000 over billed. For job B, $80,000 ÷ $100,000 = 80.00%, so $125,000 × 80.00% = $100,000 earned. Billed $90,000, it is $10,000 under billed.

How to use it

1. Enter the contract amount, with approved changes included.
2. Enter your current estimate of the whole job's cost. It must be above $0, because cost to date is divided by it.
3. Enter the cost to date and the billed to date.
4. Read the result plate, then the figures under it. The math block shows each step with your numbers, so you can check any line by hand. Copy link saves your numbers in the link, not on our servers.

How to read the results

• Percent complete: the share of the estimated cost already spent.
• Earned revenue: that share of the contract amount.
• Estimated gross profit: the contract amount less the estimated total cost, the profit the job is expected to make.
• Gross profit to date: earned revenue less cost to date.
• Cost to complete: the estimated total cost less the cost to date, what is left to spend if the estimate holds.
• Backlog: the contract amount less earned revenue, the contract still to be earned.

Percent complete is only as good as the estimate under it. If cost to date passes the estimated total cost, the calculator says so and still shows the figure, but percent complete is above 100% and the estimate needs updating before the number means much. A job with nothing spent yet is 0.00% complete, so everything billed so far counts as over billing.

For many jobs at once, the WIP schedule template runs the same arithmetic on up to 20 jobs, with totals for each money column.

About the example figures

The starting numbers are the WIP schedule's worked example, not a typical job or a target. Nothing on this page says what your estimate, billing or profit should be. The math is multiplication and division, and the only inputs are yours.

This is the cost-to-cost arithmetic a WIP schedule uses. How your financial statements report revenue is your accountant's call.

FAQ

Related tools

• The free WIP schedule template runs this arithmetic for up to 20 jobs in Excel and totals the over and under billing.
• The guide to retainage in construction explains the part of each invoice that is held back.