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Work in Progress (WIP) is billable time and expenses that have NOT YET been billed on a client invoice and/or recognized/accrued in the financial books and records. It is work that is already completed, or expenses already incurred, but it is in the progress of being billed and/or recognized.
In one of the world’s top 5 stock exchanges, the budget of its US$25 million project had overrun for more than 3 months before its project managers, mgt. committee and steering committee knew about it. This can happen if your project mgt. tool doesn’t support WIP accounting.
Production is a continuous process. So, any work that has been started but is not yet completed before the end of the accounting period is reported as work in progress (WIP) under Generally Accepted Accounting Principles (GAAP).
Projects in industries such as banking, healthcare, IT/software, insurance, professional services and securities aren’t material-intensive but labor-intensive. Different from the materials in an assembly line production, the human resources allocation and utilization in a project can change in a much more dynamic and complex manner. In addition, the following must be figured out before the actual project labor cost can be calculated:
The information for figuring out the above lies in a high-quality project mgt. system.
Yes, 8Manage PPM provides the following features for the automatic recognition of other WIP costs in a project:
Yes, 8Manage PPM provides the following features for the automatic recognition of WIP revenues: