Time & Materials is a type of construction contract. As the name suggests, a Time & Materials contract provides that the client will pay based on the contractor’s time and money spent on materials. Typically these contracts will specify an hourly rate (or rates) for the time, plus a standard markup for materials. A contractor may also provide an estimate of the time and materials the job will require; if you’re the client, just be aware that you will be billed based on the actual time / materials, and the estimate is (in this case) just that: an estimate!
Also known as: Time and Materials, T&M, T+M, Cost plus
Awesome Carpentry offers to install a new set of cabinets for Mr. and Mrs. Smith on a time and materials basis. They will charge $50/hr for their foreman’s time, $40/hr for their tradesman’s time, and a 10% markup on any purchases made.
They estimate that the total cost of the job will be $3,200.
Awesome Carpentry ends up using 8 hours of foreman time, 8 hours of tradesman time, and spent $2,000 on materials. Their final bill comes out to $400 + $320 + $2,200 = $2,920.
Note that their earlier estimate of $3,200 has no bearing on the invoice; for Time and Materials jobs you only bill for time actually spent and materials actually purchased.
Note also that many clients prefer fixed price to Time & Materials, since there is always a risk with Time & Materials contracts that the final cost of the job could significantly exceed the original estimate!
Knowify offers comprehensive Time & Materials contract management, and can help to automate monthly billing by automatically pulling labor time and materials purchased into the invoice at their specified rates and markups. If you do a lot of Time & Materials work, Knowify can save you hours of time on your billing each and every month.
See how it works:
Managing cost plus jobs | Knowify Pro webinar series