A WIP schedule for boat builders is a monthly worksheet that tracks every active build: the contract price, the estimated total cost, the cost incurred so far, the percent complete, the revenue earned, and the amount billed. Comparing earned revenue to billings then shows whether each build is overbilled or underbilled. WIP stands for work in progress.
Current GAAP, ASC 606, changed the rules behind this schedule, but many older guides still describe the old method. So this guide explains how to build the schedule, how the rules work today, and how to keep it current across several builds.
What Is a WIP Schedule for Boat Builders?
A custom boat can take eight months or more to build, and customers usually pay in deposits and milestones along the way. As a result, the cash you collect rarely matches the revenue you have earned. A WIP schedule therefore closes that gap. It shows, build by build, how far along each boat is and how much of the contract price the work has earned.
Without one, you guess at job profitability until the boat delivers and every cost is in. Our guide to a fractional CFO for boat builders explains why that guess gets expensive, and our post on customer deposits also shows why deposits are not revenue.
How Do You Build a WIP Schedule for Boat Builders?
Build one schedule line per active boat, then follow these six steps. The method below uses cost-to-cost, because it measures progress by the cost you have incurred compared with the total cost you expect.
1. First, record the contract price, including approved change orders.
2. Second, estimate the total cost to build the boat, using your current estimate and not the original budget.
3. Third, record the actual cost incurred to date, from your job-cost reports.
4. Next, divide cost incurred by estimated total cost to get the percent complete.
5. Then multiply the percent complete by the contract price to get revenue earned to date.
6. Finally, compare revenue earned to total billings to date, because the difference is your overbilled or underbilled position.
What Does a Full WIP Schedule Look Like?
These numbers are illustrative, but the method is real. Take a custom build with a $600,000 contract price and a $450,000 estimated total cost. Six months in, the builder has incurred $225,000 of cost and billed $350,000.
| Step | Calculation | Result |
| Percent complete | $225,000 cost to date divided by $450,000 estimated cost | 50% |
| Revenue earned to date | 50% times $600,000 contract price | $300,000 |
| Gross profit earned to date | $300,000 revenue less $225,000 cost | $75,000 |
| Billed to date | Deposits and milestones billed | $350,000 |
| Overbilled position | $350,000 billed less $300,000 earned | $50,000 |
However, the last line matters most. The build is $50,000 overbilled, so you have collected $50,000 more than the work has earned. That money is a liability, so it is not profit. But if the build runs over its cost estimate, you may need it to finish the boat.
Why Does the Cost Estimate Matter So Much?
The estimate drives the percent complete, so a stale estimate corrupts every other number. Suppose a material price increase lifts the estimated total cost from $450,000 to $500,000. Nothing else changes, yet the picture shifts.
| Same Build | Original Estimate | Updated Estimate |
| Estimated total cost | $450,000 | $500,000 |
| Percent complete | 50% | 45% |
| Revenue earned to date | $300,000 | $270,000 |
| Gross profit earned to date | $75,000 | $45,000 |
| Expected total gross profit | $150,000 | $100,000 |
| Overbilled position | $50,000 | $80,000 |
Therefore, the updated estimate cuts expected profit by a third and raises the overbilled cushion you must protect. Still, if you had not updated the estimate, the schedule would still show a healthy 50 percent complete and $150,000 of profit. Because of this, owners often learn about overruns after the boat has shipped.
What Does GAAP Require Today?
Older guides describe a choice between percentage-of-completion and completed-contract accounting, but that framing comes from guidance that ASC 606 largely replaced. Today you decide, contract by contract, whether you satisfy the work over time or at a point in time.
ASC 606-10-25-27 lists the tests for recognizing revenue over time, and the FASB staff paper that reproduces them is worth reading. The test most relevant to a custom boat is the third one, because it covers assets built to a customer’s order: your work creates an asset with no alternative use, and you have an enforceable right to payment for the work completed to date.
If you meet an over-time test, revenue grows with progress, and cost-to-cost is a common way to measure it. But if you meet none, revenue appears when the customer takes control, often at delivery.
Three details from the guidance matter here, because they decide the outcome. First, the standard assesses alternative use at contract inception. Second, a highly customized asset is less likely to have an alternative use, according to FASB’s own basis for conclusions. Third, a right to payment must cover your cost plus a reasonable profit margin if the customer cancels, and the payment schedule alone does not prove it.
That third point also connects to deposits. For example, if a deposit is refundable for reasons other than your failure to perform, it does not show a right to payment. Therefore, the contract language decides whether a build qualifies for over-time recognition. Next, have your CPA read your build contract and make the call.
What Do Overbilled and Underbilled Mean?
Overbilled means you billed more than the work has earned. The excess is a liability, called a contract liability, so it is cash you may need to finish the build. Underbilled is the reverse, because the work has earned more than you billed. That position is an asset, called a contract asset, but it creates a cash gap until you bill the next milestone and collect.
The two positions point in opposite directions, so track both for every build.
How Do You Track Several Builds at Once?
Most builders run more than one boat at a time, and each sits at a different stage. Next, roll the individual schedules into one summary. The summary below uses invented numbers, but the pattern is common.
| Build | Revenue Earned | Billed | Position |
| Build A | $300,000 | $350,000 | $50,000 overbilled |
| Build B | $180,000 | $150,000 | $30,000 underbilled |
| Build C | $90,000 | $120,000 | $30,000 overbilled |
| Total | $570,000 | $620,000 | $50,000 net overbilled |
The total looks comfortable, since you hold $50,000 more than you have earned. But Build B carries $30,000 of earned, unbilled work. If it hits a cost overrun before its next milestone, the company-wide number will hide the risk, because it blends all three builds. Our 13-week rolling cash flow forecast guide also shows how to plan around those billing dates.
How Often Should You Update a WIP Schedule?
Update every active build each month, as part of the close, because a stale schedule misleads. Our guide to How the Monthly Financial Close Process Works also explains where the schedule fits. Also update the estimate between closes when something material changes.
Change orders deserve special attention, because they move both sides of the calculation. A change order raises the contract price, but it also raises the estimated cost. If you record one side and not the other, however, the percent complete drifts.
How Does Tax Treatment Differ From GAAP?
However, tax rules follow a separate path. IRC Section 460 governs long-term contracts, and it can also reach some manufacturing contracts. It also includes exceptions for smaller companies. Which rules apply to your builds depends on your size and contract terms, so your CPA should decide. Book and tax results can differ, but that is normal.
What Mistakes Do Boat Builders Make With WIP Schedules?
Five mistakes show up again and again. First, builders update actual costs every month but leave the estimate at the original budget. Second, they treat deposits as revenue instead of billings. Third, they record a change order in the price but not in the estimated cost. Fourth, they update the schedule quarterly instead of at every monthly close. Finally, they never reconcile the WIP schedule to the general ledger.
The first mistake is the most common, and it is also the most expensive.
How Does a Fractional CFO Help With WIP Schedules?
A fractional CFO sets up the schedule, owns the monthly update, and reviews each estimate with the shop. That removes the guesswork from job profitability, so the owner sees real numbers each month. To see how an engagement works, read about our recurring partnership.
| Westport Insight: A WIP schedule is one of the first things we set up for a boat builder. It replaces guessing at job profitability with a monthly number the owner can check, build by build. |
Frequently Asked Questions
How do you build a WIP schedule for boat builders?
First, list each active build with its contract price and your current estimated total cost. Next, divide cost incurred to date by the estimate to get the percent complete, multiply by the contract price to get revenue earned, and compare that to billings to find the overbilled or underbilled position.
What is percentage-of-completion accounting?
A way of recognizing revenue as the work progresses instead of waiting for delivery. Today, however, ASC 606 frames the question as recognizing revenue over time versus at a point in time, and cost-to-cost is a common way to measure progress.
Is completed-contract accounting still allowed?
Not as a free choice for financial statements. Under ASC 606 you recognize revenue over time when the criteria are met and at a point in time when they are not. Tax rules differ under IRC Section 460, so ask your CPA.
What does overbilled mean?
You have billed more than the work has earned. The excess is a liability, so it is not profit you can spend.
What does underbilled mean?
The work has earned more than you have billed. It is an asset, but it creates a cash gap until you bill the next milestone and collect.
How often should a WIP schedule for boat builders be updated?
Every month as part of the close, but sooner when a change order or a material cost shift changes the estimated total cost.
What happens if a boat build runs over its estimated cost?
The percent complete falls and the expected profit shrinks, and a large overrun can turn a projected profit into a loss. A schedule that you update monthly shows the problem while you can still react, because the percent complete moves with the estimate.
Do customer deposits count as revenue?
No. A deposit is a billing until the work earns it, so our post on customer deposits explains the difference in detail.
The Bottom Line
A WIP schedule for boat builders turns a long, deposit-funded build from a guessing game into a number you can trust every month. The method is simple, but the discipline is the hard part, especially across several builds.
Keep the estimate current and record change orders on both sides, and also let your CPA confirm how ASC 606 applies to your contracts.
Finally, if you are not confident that your build schedules reflect real progress and real profit, schedule a free Financial Health Evaluation with Westport Financial.
