How Time and Materials Contracts Work in Knowify

If you have large contracts that you bill your client based on Time and Materials instead of a fixed price, Knowify’s Cost Plus / Other contract style has the ability to quote these rates to your client, and automate the creation of the invoices. To do this, you’ll first want to add a new job and choose your Cost Plus / Other contract:

This will default to “Advanced” as your job costing style (click here to learn more about job costing style), so it creates a phase for each T&M rate you add. This will be covered more later in the guide. Since the job costing is set to advanced, we will start in the contract creation screen:

To add your Time and Materials rate, click “Add New Deliverable” and it will pull up the deliverable creation screen:

Choosing Time & Materials will prompt you to name the deliverable you’re offering the client and write a description:

Once the description is added, you will next be prompted to add the different billing rates:

For Time (3.1), choosing Universal will bill one rate for any employees that track time against this job. If you choose Resource, you can set an individual rate per each employee (ex. we charge $50/hour for John, but $60/hour for Paul). If you choose Role, you set a different rate per type of employee (ex. we charge $40/hour for apprentice plumbers, but $70/hour for master plumbers). For this deliverable, we’ll set a universal rate of $60 per hour:

The optional field that asks “Do you wish to provide an approximate number of hours and price for this work?” is for quoting an estimated total to your client. NOTE: This just a display feature. It shows a client an *ESTIMATED* total, and does NOT carry over to invoices. The client will ONLY be billed for submitted and reviewed hours against this deliverable. See example below:

For Materials (3.2), you will simply be prompted for a markup rate for any purchases, bills, or parts added against this deliverable:

If you choose to provide an estimate, as shown earlier, you can also include a list of materials and estimated rates. NOTE: This is just an estimated cost, and will not make these items available to invoice. You will first need to enter the actual materials and costs against the job.

When we save this deliverable, it will be shown in the contract creation screen with rates and description:

Which will display on the contract output as well:

If you chose to include an estimated price, this will be shown in both the contract creation and output as well:

This is how you create a Time and Materials deliverable, and if you have multiple rates for one job, you can add as many different deliverables as you’d like:

Once the contract is active, we can start adding our actual Time and Material cost against the job, so they will carry over to the invoice. First, we’ll start with time. 

Between the Smartphone App and Web Browser Application, hours can be entered in a variety of different ways in Knowify which you can learn more about by clicking here. For this example, we’ll manually enter hours from the project plan:

In this situation, we’re entering hours against Window / Door Installation, so it will use the appropriate billing rate:

But if we change the Phase to our Drywall and Framing, it will end up billing using that rate instead:

 

Submitting these hours will push them to our Review Time section, where they can be approved. NOTE: Only APPROVED time will carry over to the client invoice. If it is submitted by an employee but not approved, it will not be shown as billable.

Once the time is approved, it will be shown as Unbilled Revenue on the job:

Next, we’ll apply some material cost to the job. To learn more about material costing, you can check out our guide on the purchasing process by clicking here. For this example, we’ll log a Purchase Order for the Windows and Doors, as well as our Drywall, against their respective phases:

This can also be done as a catalog/inventory allocation in the project plan. We’ll use our Metal Studs as the example:

These will all then also show as Unbilled Revenue:

Which means we are ready to create an invoice! To do this, you can go to your Contract & Changes tab, and simply click “Invoice Now”:

This will pull you into the invoice builder, and automatically add all of your Time Entries and Material Costs into the invoice, at their rates set on the contract:

And they will be shown on the invoice document as well, with the name of the item, the quantity, the rate, and the subtotal:

Note: You can edit this information display by clicking the “Adjust information for time entries” and “Group invoice items” at the bottom:

Once the invoice is submitted, this will move the Unbilling Revenue, to Billed Revenue, and show you the profitability of the project to date:

This is just one of many different billing styles available in Knowify. To learn more about T&M jobs, Cost Plus / Other contracts, or anything else in Knowify, please do not hesitate to reach out to use at support@knowify.com