Percent Complete Billing in Construction — How It Works

What Is Percent Complete Billing?

In construction, contractors bill clients as work progresses — not all at once at the end. This is called progress billing or percent complete billing. Instead of waiting until a $500,000 project is finished to invoice, the contractor bills a portion of the contract value each month based on how much work has been completed.

The key question is: how do you know what percentage of the job is actually done? That is where the percent complete calculation comes in — and where most of the complexity in construction accounting lives.

The Cost-to-Cost Method

The most common way to calculate percent complete in construction is the cost-to-cost method. The formula is simple:

This method is widely accepted by accountants, lenders, and bonding companies because it is based on actual cost data rather than someone's opinion of how far along the work is.

Revenue Earned vs. Billed

Once you have the percent complete, you can calculate revenue earned:

Revenue earned is what the contractor has actually earned based on work completed — regardless of what has been invoiced. The difference between what has been billed and what has been earned is what creates over and under billings.

Over Billings and Under Billings

This is where percent complete billing connects directly to the WIP schedule:

• Over billing — Billed more than earned. The contractor invoiced $50,000 but only earned $40,000. The $10,000 difference is a liability — they owe that work to the client.
• Under billing — Earned more than billed. The contractor completed $40,000 worth of work but only invoiced $30,000. The $10,000 is an asset — money earned but not yet invoiced.

Why Percent Complete Is Hard to Track in QuickBooks

QuickBooks Online does not calculate percent complete for you. To get the number manually, you need to:

1. Export all costs by job (bills, expenses, purchases)
2. Get the estimated total costs from each estimate
3. Divide costs to date by estimated total costs for each job
4. Multiply contract value by that percentage to get earned revenue
5. Compare earned revenue to billed amount to get over/under

For a bookkeeper managing 10 contractor clients with 5 active jobs each, that is 50 separate calculations every month — all done manually in a spreadsheet.

Common Mistakes in Percent Complete Billing

• Using billing percentage instead of cost percentage — Some contractors estimate percent complete based on how much they have invoiced. This is circular and inaccurate unless billings exactly track work completed.
• Not updating estimated total costs — If a job goes over budget, the estimated total costs should be revised upward. Using the original budget when actual costs have blown past it will overstate percent complete.
• Missing costs in QBO — If a bill or expense is not assigned to a job in QuickBooks, it will not show up in costs to date. This understates percent complete and understates costs.
• Including retainage in billed amounts — Retainage should be tracked separately. Including it in regular billed amounts distorts the over/under billing calculation.

How ReconcileBook Handles Percent Complete

ReconcileBook connects to QuickBooks Online and calculates percent complete automatically for every job using the cost-to-cost method:

• Pulls all costs (bills and purchases) assigned to each job
• Pulls estimated total costs from QBO Estimates
• Calculates % Complete = Costs to Date ÷ Estimated Total Costs
• Calculates Revenue Earned = Contract Value × % Complete
• Calculates Over/Under Billings against invoiced amounts
• Shows retainage held per job separately

All of this updates live every time you open the report — no spreadsheets, no manual calculations.