Work in progress

Work in progress is the money a shop has already spent on repair orders it has not billed. Parts received against a ticket. Labor logged by a technician. A sublet invoice that came back from the machine shop. All of it is cash out with no cash in yet.

The same phrase does a second job on the job board, where it marks the vehicles being worked on right now. Shop owners usually mean the first one.

What counts as work in progress?

Any open repair order carrying cost. That includes the obvious ones on a lift and it also includes the truck parked behind the building waiting on a backordered turbo, with a $1,900 part already on the shelf against it.

Three components make up the number. Parts issued to the ticket, whether they are installed or still in the box. Labor hours logged against it. Sublet the shop has been invoiced for. Some shops add the technician wage cost of those logged hours to get closer to real dollars committed, which is the more useful version if the system will produce it.

A half-finished repair order is the shop version of a half-built product. The turbo sitting in its box against an open ticket still belongs to the shop, it was still bought on somebody's terms, and it is still counted until the customer is billed for it.

Why does work in progress matter to a shop owner?

Because it is cash the shop financed. A parts order sitting against an open ticket was paid for on a supplier account with terms, and those terms run whether or not the customer has approved anything. A WIP number that grows while car count holds flat means tickets are opening faster than they close, and the shop feels it as a tight week two weeks later.

It also distorts the numbers people watch. Labor logged on open ROs is production that has not been sold, so a shop reading its gross profit mid-month while WIP is climbing is reading a number that will move.

How do you age a WIP report?

Sort the open repair orders by the date they were opened and read from the bottom. Anything past a week wants a name attached to it and a reason. The reasons are always the same handful: waiting on parts, waiting on customer approval, a teardown in progress and a finished vehicle nobody has picked up.

Each of those has a different fix and only one of them is a parts problem. Aging the list is what stops a shop from treating all four as the same delay. The old tickets at the bottom are usually not delayed at all; they are forgotten.

Two of those four buckets have a statute behind them, which is worth knowing before somebody decides the ticket can wait. A job stopped for approval is stopped for a reason: California bars a repair dealer from charging for work or parts in excess of the estimated price without the customer's consent, taken before the extra work is done. The finished vehicle nobody has collected has a clock on it too. Under California Civil Code section 3068 the repair lien arises when the written statement of charges is presented to the registered owner or 15 days after the work is finished, whichever comes first. From that point the shop gets 30 days to apply for authorization to conduct a lien sale or to file an action in court. Miss both and the lien is extinguished, which turns a collectable repair order into a conversation with a collections agency.

The application itself goes to the state, so the calendar keeps running after the shop files. Civil Code section 3071 covers a vehicle "with a value determined to be over four thousand dollars ($4,000)" and says the lienholder "shall apply to the department for the issuance of an authorization to conduct a lien sale." The department notifies the registered and legal owners, who get 10 days from the mailing of that notice to send back a signed Declaration of Opposition, and an opposition filed on time stops the sale unless the shop files a court action within 30 days of the department's notice. A truck finished in March and still in the lot in June has already spent most of what the statute gave it.

Two columns make the report worth reading. The date the ticket opened, and the dollars committed against it. Sorted by age, the top of the list is the shop's operational problem. Sorted by dollars, the top of the list is the shop's cash problem, and those are rarely the same vehicles. Print both and hand the dollar version to whoever writes the checks.

What inflates WIP without anybody noticing?

Repair orders held open as a parking lot. A customer approves two of five recommended jobs, the shop invoices the two, and somebody leaves the ticket open so the other three do not get lost. Now three unsold jobs and whatever cost is attached to them sit in work in progress indefinitely.

Declined work belongs in its own record with its own date, so it can come back at the next visit without holding a ticket hostage. Close the RO. The same discipline applies to a repair order opened for an internal job or a shop truck, which can sit open for a year with real parts on it.

Why does WIP run higher in a diesel shop?

Ticket size and lead time. A single engine job or a full fuel system on a 6.7 Power Stroke can carry more committed dollars than a week of brake work, so one vehicle moves the whole number. When that job also waits on a part that ships from a regional warehouse, the dollars sit longer.

The average repair order that makes a diesel shop attractive is the same thing that makes its work in progress heavy. That is a normal condition and it wants managing instead of fixing. Age the report weekly, chase the vehicles waiting on approval first, and keep the finished ones from sleeping in the lot.

Back to the glossary, or read how an estimate gets priced.