Work in progress (WIP, travaux en cours) refers to partially completed goods or services at the balance sheet date — not yet finished or delivered to customers. It constitutes a balance sheet asset (inventory) valued at partial production cost. In financial due diligence, WIP analysis is critical in sectors with long production cycles (construction, engineering, bespoke manufacturing): overvaluation inflates assets and profit, undervaluation understates them. Margin at completion on active projects is a key forward-looking performance indicator.

‍

Example: due diligence on a Swiss engineering firm reveals CHF 3.8 million of WIP across 8 active projects. Project-by-project review uncovers one CHF 850,000 WIP project with an unprovisioned cost overrun risk of CHF 320,000 (10% cost at completion). This under-provisioning reduces normalised EBITDA by CHF 320,000 and the DCF valuation by approximately CHF 2.5 million at 7.8x EBITDA — a material finding justifying a specific SPA warranty on active project profitability.

‍

Hectelion analyses work in progress and margin at completion in every long-cycle company due diligence to detect unprovisioned cost overrun risks.