At a glance
- A WIP report earns its keep when it shows earned revenue, billed-to-date and the over/under position by phase, not one unbilled total.
- Percent complete should come from deliverables, not from budget spent; the gap between the two is the first thing to watch.
- Subconsultant invoices belong in the same view: received, approved, marked up and billed through on the prime contract.
- The exception table below pairs each signal with what an agent flags weekly and who resolves it, so it can be copied into your own review process.
- Every resolution stays with your project accountant, controller or project manager; the agent only prepares the evidence.
WIP accounting for A&E firms comes down to one question: how much work has the firm completed that it has not yet billed, and how much has it billed ahead of the work? The hard part is answering it phase by phase, with subconsultant costs included, while there is still time to act.
What should be included in a WIP report for an engineering firm?
A useful engineering-firm WIP report shows percent complete, earned revenue, billed-to-date, aging, realization rate and subconsultant costs for each project. [1] Monograph, a software vendor, defines WIP as "the value of completed, unbilled work: earned value minus billed to date." Deltek's Ajera help uses a different definition: billable time and expenses that have not yet been included on a final client invoice. [2] Pick one definition and state it at the top of the report.
Monograph's article lists these items for each project: [1]
- Percent complete and earned revenue, tracked by phase rather than by whole project.
- Billed-to-date and the over/under billing position.
- WIP aging by bracket.
- Realization rate, which the same article calls "among the least-tracked metrics in A&E firms." [1]
- Subconsultant costs, "which sit inside both your WIP position and your cash exposure." [1]
BQE's WIP guide adds that most reports carry a column for the total contract amount, and that tools such as BQE CORE can analyze firm data and automate reports like WIP. [5]
How do you calculate percent complete for AIA billing?
On a fee contract, earned revenue is percent complete multiplied by the phase fee, and billing for the period is earned revenue minus the amount already billed. In Ajera's percent-complete billing type, the firm charges a fixed amount and bills a percentage of the total based on how much of the project is complete. [3] Two cases cover most A&E billing:
- Fee contract: the project manager estimates percent complete against deliverables, earned revenue = percent complete multiplied by the phase fee, and billing for the period = earned revenue minus billed to date.
- Schedule of values (G703 style): percent complete for each line = value of work completed to date divided by that line's scheduled value. This is a method, not an AIA formula.
AIA billing refers to the G702 and G703 payment-application forms. AIA states that these documents are designed for a project "where a Contractor has a direct Agreement with the Owner," and that G703 "breaks the contract sum into portions of the work." [6] An A&E firm billing a fee contract may not fit that structure, so confirm with the owner's contract which billing format and percent-complete basis apply.
The input matters more than the formula. Monograph warns that "Percent spent tracks budget consumption, while percent complete measures actual progress," and advises: "Do not substitute percent spent for percent complete." [1] Have the project manager set percent complete against deliverables, then let accounting calculate the rest.
What's the difference between overbilling and underbilling on a project?
The gap is billed minus earned: positive is overbilled, negative is underbilled. Overbilling means billed-to-date is higher than earned revenue; underbilling means earned revenue is higher than billed-to-date. Monograph notes that "an overbilled project is a liability, because the firm owes the client work it has not yet delivered." [1]
BQE's guide makes the opposite point: "An under-billed project means your business ends up being responsible for financing the project." [5]
The WIP exception table
A static dashboard shows the gap. An agent can also read the documents behind it, such as a subconsultant invoice PDF, assemble the evidence and send the exception to the right person each week. Thresholds marked N are set by your firm.
| Signal | What an AI agent flags weekly | Who resolves it | Action before it becomes a write-off |
|---|---|---|---|
| Overbilled phase (billed above earned) | Phases where billed-to-date exceeds earned revenue on current percent complete | Project manager, then project accountant | Confirm percent complete against deliverables; hold the next invoice or document the reason |
| Underbilled phase (earned above billed) | Phases where earned revenue exceeds billed-to-date, with the date of the last invoice | Project manager | Decide whether to invoice this cycle; accountant prepares the invoice |
| Percent spent runs ahead of percent complete | Phases where budget consumed exceeds the reported percent complete by more than N points | Project manager | Reassess scope and remaining effort; raise a change-order conversation if scope grew |
| Aging unbilled time or expenses | Unbilled entries older than N days, grouped by project | Project manager | Bill, adjust, or record a decision before memory fades |
| Subconsultant invoice received but not passed through | Invoices on file whose cost sits in WIP with no matching line on a client invoice | Project accountant | Add the pass-through and markup to the next client invoice, or record why not |
| Subconsultant invoice awaiting approval | Invoices waiting for project manager approval longer than N days | Project manager | Approve, dispute with the subconsultant, or return for correction |
| Markup mismatch | Billed markup that differs from the rate in the prime contract or the project's billing terms | Project accountant | Correct the next invoice or confirm the exception with the controller |
| Subconsultant billing above authorized amount | Cumulative subconsultant invoices above the amount authorized in the subconsultant agreement | Controller with project manager | Pause payment, review the agreement or amendment, document the decision |
- Pull the data
Export the WIP report, open subconsultant invoices and the billing terms for each active project.
- Recalculate the gaps
Compute earned revenue, billed-to-date and the over/under position per phase from the current percent complete.
- Check the documents
Read subconsultant invoices and match them to the agreement, the project and phase, and the prime-contract markup rule.
- Route the exceptions
Send each flag to the owner in the table with the evidence attached, so no one has to rebuild it.
- Record the decision
Log who resolved it, what they decided and when, so the next review starts from a known state.
The agent prepares and routes. It does not change percent complete, release an invoice or approve a subconsultant payment. Those remain your firm's own operating decisions, in line with the document review with human approval pattern.
How do I reconcile subconsultant invoices against my prime contract billing?
Subconsultant invoice reconciliation means proving that each dollar the firm owes a subconsultant is authorized, coded to the right project and phase, marked up as the prime contract allows, and billed through to the owner. Ajera's help lists vendor invoices among the entries that create WIP, so each subconsultant invoice entered in the system adds to WIP until it is billed or written off. [2]
The pattern below is a general one. It is labeled transferable because it describes a reconciliation method, not a feature of any named system:
- Match the invoice to its agreement
Confirm the subconsultant, the project, the period and the cumulative amount against the signed subconsultant agreement and any amendments.
- Check the coding
Confirm the invoice is posted to the right project and phase, so it reaches the right WIP line.
- Apply the markup rule
Recompute the pass-through amount and any markup from the prime contract's terms, and compare it with what was billed.
- Confirm it reached a client invoice
Find the line on the owner invoice, or record why the cost is being held back.
- Resolve differences with a named owner
Send each difference to the person in the table, and keep the subconsultant's corrected invoice with the file.
AIA G702 and G703 describe a contractor's payment application to an owner. A subconsultant invoice to an A&E prime is a different document on a different contract, so reconcile it against your own prime-contract terms rather than against a construction pay-application template. [6]
Why are we writing off so much WIP every month?
Monograph argues that the cause is human rather than mathematical: "Clients mentally move on from work performed months ago," "project managers hesitate to send a large invoice for work completed months earlier," and "time entries reconstructed from memory are hard to defend in a fee dispute." [1] That is a vendor's view, not a measured finding.
Three checks help, and each maps to a row in the exception table above:
- Sort unbilled WIP by age and see who owns the oldest items.
- Compare percent spent with percent complete on the phases you wrote off.
- List the subconsultant invoices that sat unapproved or unbilled before the write-off.
A monthly report shows a problem after the billing cycle has closed. A weekly review that routes exceptions to owners gives the project manager time to bill, correct or document while the work is still fresh. The same exception-routing idea underlies financial close automation, where reconciliations and open items go to named owners.
Working with Deltek and BQE
Your system of record already holds much of this data. Deltek's Vantagepoint product tour says users can "Convert WIP to invoices with built-in rules for every contract type" and says its Dela assistant can flag unbilled earned revenue automatically. [4] Before adding anything, check which of these reports and rules your own platform already provides.
We compare no products and claim no specific integration. Whether an agent can read your WIP report and invoice files depends on your configuration and export options, so confirm access with your system administrator first.
When this doesn't apply
- A firm with few active projects and few subconsultants may do this well with a spreadsheet and a standing weekly meeting.
- If your system already produces the exception list and an owner acts on it, an agent adds little.
- Percent complete on design work depends on professional judgment. The agent can compare numbers; it cannot decide how complete a design is, and it does not touch design, engineering judgment or stamped work.
Frequently asked questions
What should be included in a WIP report for an engineering firm?
Show percent complete and earned revenue by phase, billed-to-date, the over or under billing position, WIP aging, realization rate and subconsultant costs. Monograph's engineering-firm guide lists these items. Add the date of the last invoice for each phase and the project manager who confirmed percent complete.
How do you calculate percent complete for AIA billing?
On a fee contract, the project manager estimates percent complete against deliverables, earned revenue is percent complete times the phase fee, and billing is earned revenue minus billed to date. On a G703-style schedule of values, divide work completed to date by each line's scheduled value. Confirm the format your contract requires.
What's the difference between overbilling and underbilling on a project?
Overbilling means billed-to-date exceeds earned revenue, so the firm owes the client work not yet delivered. Underbilling means earned revenue exceeds billed-to-date, so the firm is financing the project. Subtract earned revenue from billed-to-date: a positive result is overbilled and a negative result is underbilled.
How do I reconcile subconsultant invoices against my prime contract billing?
Match each invoice to its subconsultant agreement, confirm project and phase coding, recompute pass-through and markup from the prime contract, and find the line on the owner invoice. Send any difference to a named owner. This is a general pattern, so adapt it to your own contract terms.
Why are we writing off so much WIP every month?
Monograph attributes write-offs to delayed billing, clients losing context on old work and time entries rebuilt from memory. Test those causes in your own data: sort unbilled WIP by age, compare percent spent with percent complete, and list subconsultant invoices that stayed unapproved or unbilled before the write-off.
Related reading
- Financial close automation covers the reconciliation and exception-routing pattern behind a month-end review.
- Document review with human approval covers how an agent prepares evidence while a named person decides.
- AI agent implementation covers how Foresight scopes and builds a workflow like this one.
- Professional services industry overview places this workflow among the other back-office processes of consulting and design firms.
Sources
- Monograph, Engineering Firm WIP Reports: Where Profit Becomes Cash (updated September 2026) (accessed 2026-10-29)
- Deltek, About work-in-progress (WIP), Ajera 8 Help (accessed 2026-10-29)
- Deltek, About billing types, Ajera 8 Help (accessed 2026-10-29)
- Deltek, Vantagepoint Accounting & Financial Management Product Tour (accessed 2026-10-29)
- BQE Software, Tips for creating a strong work in progress (WIP) report (accessed 2026-10-29)
- AIA Contract Documents, Summary: G702-1992, Application and Certificate for Payment (accessed 2026-10-29)
More in Professional firm operations
AI Proposal Automation for A&E Firms: Speeding Up SF330 and RFP Responses Without Losing Quality Control
AI proposal automation for A&E firms: a workflow table showing what an agent drafts for SF330 and RFP responses and what your licensed staff review.
Engineering FirmsWhy Clients Reject Your Invoices: Reducing Billing Disputes at Consulting and A&E Firms
Why clients reject your invoices, and how an AI review catches fee-cap overages, wrong phase codes and missing backup before billing. Includes a cause table.
Engineering FirmsAI for PE-Backed Accounting Firms: Standardize Workflows Across Acquired Practices Before You Automate
AI for PE-backed accounting firms: a workflow inventory and standardize-before-automate scoring sheet for sequencing what to build across acquired practices.
CPA Firms