In the construction industry, accurate financial reporting is more than a compliance requirement, it is the foundation of trust with surety partners. Among the most critical components of contractor financials are the Work in Process (WIP) schedule and the Completed Contracts (CC) schedule. These schedules do more than just list projects; they provide visibility into the accuracy of job costing, estimating practices, and overall financial health of the business.
One of the most valuable insights derived from the WIP and completed contract schedules is the gross profit gain/fade analysis. This analysis tracks whether a contractor’s jobs finish with more profit (gain) or less profit (fade) than originally estimated. A surety relies on this analysis to evaluate the consistency and reliability of a contractor’s estimating practices. When the results show accuracy and, ideally, conservatism, it gives the surety confidence to support larger and more complex upcoming projects. The surety sees that management understands their work, can anticipate risks, and communicates results transparently.
The presence of fade in this analysis does not automatically weaken surety support. Every contractor experiences projects that don’t go as planned. In fact, a loss job often creates an opportunity for dialogue between the contractor and the surety. Discussing what happened, identifying lessons learned, and presenting a clear plan for improvement going forward demonstrates maturity in management and builds credibility and character. A well-explained loss shows the contractor is proactive and committed to continuous improvement, which can preserve and even enhance surety support.
Ultimately, accurate and timely contractor financials that are supported by detailed WIP and CC schedules will serve as a roadmap for both the contractor and the surety. They highlight strengths, expose risks, and enable forward-looking conversations that allow the surety to extend bonding capacity with confidence. For contractors seeking to grow and pursue larger opportunities, disciplined financial reporting and openness with surety partners are key to unlocking that next level of success.