Almost every contractor I sit down with before a surety review wants to talk about backlog first, because backlog is the good news, and I usually steer us to the over/under column of the WIP schedule instead – that's where the surety's underwriter is going to start, and it's where next year's surprises are already sitting.
So here's how I'd walk an owner through it, using a working sample dashboard we built for a fictional contractor called Penrow Constructors. Every figure in it is invented, but the shape is real: a 27-year-old, second-generation concrete and site-work contractor with 150 people in the field, $46.0M of revenue, mostly bonded public work, and an owner who wants to bid a $10.9M high school addition. A switch at the top flips every section between the project managers' estimates and what each job's cost trend says, and that switch is most of the conversation.
On the books, Penrow's year looks strong. Revenue grew from $29.5M two years ago to $46.0M, gross margin is 13.1% and EBITDA is $3.08M. The WIP schedule has 12 open jobs carrying $75.42M of contract value, $42.01M earned to date and $40.77M billed.
Read those last two together and you get the number I care about. Penrow is underbilled by $1.24M overall: $2.42M of work done and not yet billed, against $1.18M billed ahead of the work. A healthy contractor usually runs the other way, and $1.86M of that underbilling sits on three jobs, the Westgate transit parking deck, the Kestrel Point distribution slab and the Millbrook High field house.
My read: underbilling on a job that's running over budget is usually cost that went in faster than the estimate moved, and some of it may never be billable at all.
Under cost-to-cost percentage of completion, a job is as complete as its cost to date divided by its estimated total cost, and revenue is that share of the contract. So the estimate to complete also sets the revenue you've already booked.
Westgate is a good example. Cost to date says the deck is 70% complete. The quantities in place say about 63%. If the job finishes at the cost per unit it has run so far, it costs roughly 34% more to complete than the project manager's estimate says. Re-estimate it, along with the slab and the field house, and the jobs are suddenly less complete than the books said, so revenue already recognized comes back out.
The strip under the switch follows that one change all the way through. Earned revenue drops by $1.31M, gross profit falls to $4.71M (10.5%), EBITDA to $1.77M, and the $1.24M of net underbilling turns into a small net overbilling. Every month before September is closed and never moves. September is the close being prepared, and it's where the catch-up lands.
My read: a company whose profit can swing $1.31M on three estimates needs those estimates reviewed every month against quantities in the field, not once a year when the CPA asks.
Fade is the gap between the margin a job was bid at and the margin it's tracking now. On the project managers' numbers, the open jobs went from $10.08M of gross profit at bid to $9.93M, which looks like barely any fade at all, because approved change orders are covering for the jobs that are slipping. On the cost trend it's $8.11M.
The chart I'd show a surety first is the track record. Penrow's 22 finished jobs were bid at 14.2% on average and closed at 12.3%, and 17 of the 22 came in below bid. The recent jobs came in much closer, which is real progress, and it's also why two jobs fading hard right now would stand out.
My read: fix the estimates on the parking deck and the slab while the September WIP is still a draft. Explaining a catch-up to your surety after they've found it costs more than the catch-up itself.
Penrow has $44.1M of backlog, about 11.5 months of work, and a bonded program of $31.7M. The surety terms in the demo are illustrative: a $45M aggregate limit, a $12M single-job limit, support at 15 times adjusted working capital, and 50% credit for underbillings. Every surety writes its own, so treat these as a frame for the conversation rather than a quote.
The working capital bridge shows how the surety gets there. Book working capital is $4.77M. Take out half the underbillings, the $0.47M of receivables over 90 days and $0.14M due from the shareholder, and adjusted working capital is $2.95M, which supports $44.3M. With Cedar Valley added, the program would be $42.6M, so the bid fits.
On the cost trend, adjusted working capital falls to $2.30M and support drops to $34.4M against a $43.7M program, which leaves Cedar Valley $9.3M short. The change orders matter too. Keep only 60% of the $1.23M pending and $342K of profit comes off, which is enough on its own to tip Cedar Valley out of reach.
My read: the levers that help are billing and paperwork. Catch-up billing on the healthy jobs moves $0.56M of underbilling into receivables, which the surety credits in full, and getting change orders signed protects the profit behind them. Neither one fixes a fading job.
Cash is $2.30M against $1.18M of overbillings, about 1.9 times, so Penrow isn't spending its customers' money, which is the first thing a banker checks. The trend underneath is less comfortable. Underbillings grew from $0.16M to $2.42M over two years while revenue grew, and another $3.44M is sitting in retainage. That's earned cash Penrow can't collect yet, and it's why fast growth feels tight in the bank account even in a good year.
My read: billing cadence is the cheapest fix on this page, and I'd look at it before talking to the bank about a bigger line.
The exit lens tab asks what this is worth to a buyer. Contractor earnings swing with the WIP, so a buyer leans on the average, which is $1.99M across the last three years. At an illustrative 4.5x that's about $9.0M, against the $13.9M the booked TTM alone would suggest. Any fade a buyer finds in diligence comes off before the multiple, and every net-underbilled WIP gets a hard look as an earnings quality question. If a sale is on the horizon, the exit readiness demo walks through the rest of that conversation.
My read: a WIP schedule that already shows its fade is worth more to a buyer than one that looks better and has to be re-cut in diligence.
Every card, chart and table on the page has a + Deck button. Use the surety review pack loads the set I'd bring to a surety or bank meeting: the scorecard, the WIP schedule, fade, the closed-job track record, backlog burn-off, bonding capacity, the working capital bridge and the exit lens, ending on a next-steps slide. It downloads as an editable PowerPoint, and the speaker notes record which estimate, change-order rate and surety terms were active when you built it.
My read: walking into the surety review with your own re-estimate already done changes who's asking the questions.
We connect read-only to your accounting and job-cost systems, rebuild the WIP schedule from your job costs, billings and change-order log, and test every estimate to complete against its cost trend and the quantities in place. Then we put it in the form your surety, your bank and your CPA read, and refresh it after every month-end close, so fade shows up while it can still be fixed.
That's CFOptimize – accelerate your growth, built for contractors who are growing into their bonding line. If you'd like to see it on your own jobs, grab time with me and we'll walk through your WIP together.
Mark
Penrow Constructors is a fictional company and every figure in the dashboard and in this post is invented for illustration. Nothing here is drawn from any client's books. Surety terms and multiples are illustrative assumptions, not quotes or underwriting standards, and nothing here is tax, legal, surety or investment advice.