The monthly work in progress review starts calmly. Then someone notices a project with a large unbilled balance that has been growing for three months. The PM says the client asked to hold invoicing until a change order is signed. Accounting did not know. The cash forecast is now wrong.
Unbilled work is one of the most common financial surprises at PM/CM firms. It is rarely fraud or negligence. It is a visibility problem.
Why unbilled balances build up
PM/CM work is billed in many ways: hourly, not-to-exceed, lump sum by phase, percent complete. Each contract has its own rules. Labor gets charged in Deltek every week, but invoices depend on things outside accounting's view:
- Client approval of a change order or amendment
- A billing cap that has been reached
- A disputed prior invoice
- Work charged to the wrong project or phase
- A PM who simply has not reviewed the draft invoice
The data in Deltek shows that charges and billings diverge. It does not show why.
Where the hours go
Building the report. Someone exports project financials, cleans them in Excel, and calculates unbilled by project and age.
Chasing explanations. Accounting emails each PM. Answers trickle in. Some never come.
Reconciling stories. The PM's explanation, the contract terms, and the Deltek setup have to be lined up to decide whether the balance is billable, at risk, or needs a write-off.
Repeating it next month. The same projects often show up again, and the explanations start over.
Why it matters
- Cash flow. Unbilled work is cash you have earned and not collected.
- Margin. Work over a cap that is never approved becomes a write-off.
- Forecast accuracy. Revenue forecasts built on unbillable work are optimistic by design.
- Client relationships. Large catch-up invoices after months of silence create friction.
A better workflow
Age it and set thresholds
Track unbilled by age, not just amount. Any balance older than one billing cycle should require an explanation.
Make the PM the owner
Each flagged project needs a short note from the PM: reason, expected billing date, and risk. Keep the note with the project so next month starts from it.
Compare against contract limits
Show remaining contract value alongside unbilled work. A project near its cap with growing unbilled charges is the one to watch.
Review trends, not snapshots
A balance that grows three months in a row is a different conversation from a one-time timing issue.
Where AI helps, and where it does not
It helps with:
- Pulling Deltek data into a consistent view each month without manual exports
- Flagging projects where unbilled is growing or approaching contract limits
- Asking PMs for explanations and keeping the history in plain English
- Answering questions like "which projects have unbilled over 60 days?" without a pivot table
It does not replace:
- Decisions on write-offs or billing disputes
- Client conversations
- Fixing project setup errors in Deltek
What matters: clean project structure. If phases and contract values are set up inconsistently, any analysis inherits the problem.
How we approach it
IQ-Forecast brings Deltek financials into plain-English analysis and forecasting for PM/CM firms, so finance and project leaders can see issues like growing unbilled balances early.
A useful next step
List your top ten unbilled balances and ask one question for each: do we know exactly why this has not been invoiced? If you cannot answer quickly, talk to us about making that visibility routine.
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