Contractors

The Bond Exchange has bonded over $2.5 billion of construction contracts over the past decade alone. We specialize in maximizing the bonding capacity for contractors regardless of their trade or specialty and despite how big or small their bond needs might be.

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"It is important as a public works contractor to partner with a well seasoned bond agent.   The Bond Exchange has played a key role in the success of my business for the past decade.  The level of service they provide is unmatched.  I would recommend their services any day of the week."

Ali Navi, President
AMD Construction Group

Understanding the Importance of a Work-in-Progress Schedule

A work-in-progress schedule, also termed “status of contracts,” is a useful surety underwriting tool utilized to track the progress and financial performance of a contractors uncompleted projects throughout a specified time.  Often requested on a quarterly or semiannual basis, the work-in-progress schedule provides the following project by project details for underwriting review:
  • Current contract price

    • Indicates the current value of a contract inclusive of approved change orders which may have resulted in an increase or reduction in the original contract value

  • Total estimated costs on the job

    • Provides details with regard to the original estimated costs on a project versus fluctuations in these costs throughout the course of a project, which is fundamental to the jobs profitability.

  • Total estimated profit for the project

    • There are an abundant number of reasons why the original estimated gross profit on a project can fluctuate during its completion.  The work-in-progress schedule allows underwriting to perform job profitability trending during the course of a project.  Such analysis can be useful in detecting profit fade or potential job losses which can, if significant, affect the overall profitability of the company.

  • Project cost incurred to date

    • The costs incurred by a contractor during a projects duration are critical to the tracking of the original, current and overall profitability of the project.  

  • Project billings to date

    •  Progress payment submittals are essential in determining whether the project billings exceed or fall short of the costs and earnings recognized by the contractor, to date.

  • Over/Under Billings

    • Over billings are those that exceed the actual incurred costs and earnings on the job to date, also termed “Billings in Excess of Costs and Estimated Earnings.”  Under billings are, of course, the exact opposite and are often coined “Costs and Estimated Earnings in Excess of Billings.”  Although over and under billings can pose some underwriting issues, it is understood that there are certain circumstances, categories of contractors and types of contracts where they are deemed to be somewhat “normal,” especially at the commencement of a contract.  

    • Over/Under billings are generally calculated as follows

      • (Estimated Gross Profit  x  Percent Complete) + Total Costs to Date - Total Billings to Date

    • Should over or under billings on a project be fairly significant, the underwriter may ask that an explanation of the circumstances be provided to clarify the matter.

  • Estimated cost to complete (also referred to as “backlog”)

    • Estimated cost to complete are calculated as follows:

      • Total Estimated Costs – Costs to Date

    • Backlog is utilized as a means of determining the total amount of uncompleted work a contractor has on hand at any given time.  It often used by bond agents and surety underwriters to determine the amount of aggregate bonding capacity a contractor has for pursuing additional bonded projects.

  • Percentage of completion

    • Percent complete is similar to cost to complete or backlog however, it factors in the profit recognized on the project to date.  Percentage of completion is calculated as:

      • (Total Estimated Costs on the Project – Estimated Cost to Complete) divided by Total Estimated Costs on the Project.

In most cases, the work-in-progress schedule will have a secondary “completed contracts” section which provides the final contract price, total costs on the job and gross profit at the project’s completion for all jobs which have been completed by the contractor during the period in which the work-in-progress schedule is being generated.

For additional details and or work-in-progress assistance please feel free to contact The Bond Exchange at (800)764-7233.