Compare successive WIP estimates before the margin fades unnoticed

The latest estimate hides the direction of travel

A project still shows a positive forecast margin, but that margin has fallen at every monthly review. If each WIP report replaces the last, management may miss the pattern. Preserve successive estimates and ask the accountant and project team to explain the movement. A job can remain above zero while its remaining margin is being steadily consumed.

Compare like with like

Imagine a civil contractor whose forecast result falls after three reporting periods. Put the estimates on a consistent basis, identifying the dates, scope and methods used. Ask the accountant about any reporting change that affects the comparison. Do not describe a difference as an operating loss without checking whether it reflects a genuine estimate revision, a correction or a change in presentation.

Retain dated versions

business.gov.au recommends keeping reliable records and protecting them against unauthorised changes. Save the reports and their underlying assumptions before updating the working file. Keep adjustments traceable. An overwritten spreadsheet may show today's conclusion but leave no evidence of what management previously expected or why the estimate changed when new information became available.

Source: business.gov.au: Record keeping

Explain the movement in components

In the civil example, identify revised labour effort, changed material costs, scope adjustments and other supported drivers. Separate actual costs already incurred from changes to the estimate of remaining work. Avoid counting the same movement in both categories. Ask the project team to link important changes to evidence, such as a revised programme or a confirmed subcontract quotation.

Distinguish new information from repeated optimism

Ask whether the latest revision reflects a genuinely new event or a risk that was repeatedly omitted from earlier estimates. The answer affects the management response. Do not preserve a reassuring margin by moving an unresolved cost into the next period or assuming an unapproved variation will cover it. Have uncertainty treated appropriately with the accountant's advice.

Use the trend to change the decision

Review the current estimate and its history together when deciding the next delivery or financial action. Assign responsibility for checking major assumptions at the next review. A clear bridge between WIP versions helps management recognise a deteriorating job early, rather than discovering only at completion that every monthly report looked acceptable while the forecast margin kept shrinking.