Time and material contract (T&M)
In the United States, a time and material contract (T&M) is a type of construction contract that commits the client to pay the contractor based upon the time spent on the works, the materials used, as well as a mark-up for profit. In the UK, this type of contract is known as a cost reimbursable contract or cost plus.
This differs from a fixed price contract which commits the client to pay the contractor a lump sum fee for fulfilling the contract regardless of the amount on labour, materials, and so on used. A T&M contract is typically used on projects where it is difficult to describe the extent of the works required accurately, or where specifications and requirements are likely to change as the project progresses.
The main items that can be included in a T&M contract are:
- Labour rates: The amount that will be charged for the workforce, which may also include insurance, taxes, and so on.
- Material mark-up: It is usual for the client to be charged the retail price for materials and for a mark-up to be added by the contractor if they have a pre-agreed wholesale price with the supplier.
- Not-to-exceed: A guaranteed maximum price which places an upper limit on what the client can be charged by the contractor.
The advantages of using a T&M contract include:
- It provides the client with cost transparency and allows them to verify invoices and timesheets to ensure the costs are correct.
- It allows for greater flexibility in the extent of the works required.
- It allows works to progress even when there is no definitive plan for how it will be completed.
- It saves time in the initial estimating process which otherwise has to be done to a much higher level of detail and accuracy.
- Although there is generally a limit on their profit, the contractor can proceed knowing they are going to recover expenses with some profit, and so they can avoiding cost-cutting.
The disadvantages of using a T&M contract include:
- It can prove more risky for the client to proceed without a clear understanding of the final cost.
- It can increase the likelihood of disputes arising.
- Errors or inaccurate estimates can leave them with a low profit that may not be deemed worthwhile.
- It can necessitate more involvement from the client to ensure the contractor is motivated to progressing the works on time and within budget.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Amendment to the GB Energy Bill welcomed by ECA
Move prevents nationally-owned energy company from investing in solar panels produced by modern slavery.
Gregor Harvie argues that AI is state-sanctioned theft of IP.
Heat pumps, vehicle chargers and heating appliances must be sold with smart functionality.
Experimental AI housing target help for councils
Experimental AI could help councils meet housing targets by digitising records.
New-style degrees set for reformed ARB accreditation
Following the ARB Tomorrow's Architects competency outcomes for Architects.
BSRIA Occupant Wellbeing survey BOW
Occupant satisfaction and wellbeing tool inc. physical environment, indoor facilities, functionality and accessibility.
Preserving, waterproofing and decorating buildings.
Many resources for visitors aswell as new features for members.
Using technology to empower communities
The Community data platform; capturing the DNA of a place and fostering participation, for better design.
Heat pump and wind turbine sound calculations for PDRs
MCS publish updated sound calculation standards for permitted development installations.
Homes England creates largest housing-led site in the North
Successful, 34 hectare land acquisition with the residential allocation now completed.
Scottish apprenticeship training proposals
General support although better accountability and transparency is sought.
The history of building regulations
A story of belated action in response to crisis.
Moisture, fire safety and emerging trends in living walls
How wet is your wall?
Current policy explained and newly published consultation by the UK and Welsh Governments.
British architecture 1919–39. Book review.
Conservation of listed prefabs in Moseley.
Energy industry calls for urgent reform.