We’re making two major changes related to how work in progress is calculated that will impact your WIP reports, including the new default setting for DPPs for Australian users and an improved formula for increased accuracy.
What's changing
We are rolling out two significant updates to the Work in Progress (WIP) Adjustment Report to help you get a more accurate and complete financial snapshot of your jobs.
Default Inclusion of DPP Jobs: For Australian users, the Exclude DPP checkbox will now be unticked by default when you open the WIP screen. This change automatically includes future income from these jobs, providing a more comprehensive view. You will still have the flexibility to manually exclude DPPs if needed.
Note: The Exclude DPP checkbox is only available in the Australian version of G.J. Software.
Enhanced WIP Calculation: A future enhancement will update the WIP formula to ensure the positive WIP adjustment value for a job will not exceed its original contract amount. This new calculation will cap the percentage of completion at 100% to ensure that profit is not over-recognised.
Why it matters
Streamline Your Workflow: The default change for DPPs removes a manual step for Australian users, making it faster and easier to generate your monthly reports.
Improve Accuracy: The updated calculation ensures that even if a job's invoices exceed 100% of the contract value, the recognised profit will not exceed the budgeted amount.
Better Business Decisions: These improvements provide you with more reliable data, allowing you to manage your jobs more efficiently and make better business decisions.
Additional Details
The new WIP calculation will ensure the percentage of completion (and thus the recognised profit) does not exceed 100%. This is accomplished by adding a check within the formula.
Current Calculation:
((Percentage of Invoices to Date / 100) x Budgeted Profit Amount) - (Claimed to Date Amount - Invoiced to Date Amount) - Overrun Adjustment Amount
Think of the current calculation as three main parts:
Recognising Your Profit: The first part of the formula takes the percentage of costs received against the job and applies it to the total profit you're expecting to make on the job. This gives you a dollar value for the profit you have "earned" so far.
((Percentage of Invoices to Date / 100) x Budgeted Profit Amount)
Adjusting for Payments: The second part of the formula looks at the difference between the total amount of work you have claimed (or drawn) and the total amount you have recorded as supplier costs/bills.(Approved or Paid in Xero). This figure is the amount your current P & L and balance sheet would show without the adjustment made in the first part of the formula. The adjustment brings your profit recognition in line with the work you've completed.
- (Claimed to Date Amount - Invoiced to Date Amount)
Final Adjustments: The last part of the formula subtracts any additional adjustments for cost overruns.
- Overrun Adjustment Amount
When you put it all together, the current formula essentially says:
"Take the portion of the profit you've earned from your supplier's costs against budget, adjust it for any difference between what you've claimed and what you've invoiced, and then subtract any final adjustments."
New Calculation:
The new calculation works in the exact same way as the current one, but with a crucial improvement.
(((MINIMUM of Percentage of Invoices to Date or 100 / 100) x Budgeted Profit Amount) - (Claimed to Date Amount - Invoiced to Date Amount) - Overrun Adjustment Amount
The only difference is that the first part of the formula now has a "cap" at 100%. This means that even if you have recorded more bills than the job estimate allows, the system will only ever calculate your recognised profit based on a maximum of 100% of the original contract. This prevents the system from over-recognising income and therefore profit on a fixed-price job.
In plain English, the new formula ensures that:
"Even if your job costs exceed the total job estimate value by more than 100%, we will never recognise more than 100% of your budgeted income and profit."
Getting started
These updates are automatic and will be applied to the system on the specified rollout dates. No action is required on your part to enable these features.
Rollout information
Default DPP Setting: This feature will be live in Australia on September 9, 2025.
Enhanced WIP Calculation: This feature is on our short-term release roadmap for all regions and is expected to roll out towards the end of September 2025.
Availability
These features are available to all G.J. Gardner Homes offices and users with the office role permissions to run WIP Reports.