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Contracts & Pricing

Time and Materials (T&M)

Also known as: T&M

Time and materials (T&M) is a contract structure where the supplier is paid for the actual labour hours worked and materials used, at agreed rates.

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Under a T&M contract the buyer pays an agreed hourly or daily rate for labour plus the cost of materials, often with a markup. It is well suited to work where the full extent cannot be predicted, such as maintenance, repairs or evolving projects, because payment tracks the effort actually expended.

The flexibility of T&M comes with the need for tight oversight: timesheets, material records and often a not-to-exceed ceiling keep spending controlled. It contrasts with a fixed-price contract, where the supplier commits to a set figure, and buyers frequently move from T&M to fixed price once the scope becomes clear enough to specify.

Frequently asked questions

What is a time and materials contract?
A time and materials (T&M) contract pays the supplier for actual labour hours and materials used at agreed rates, suiting work whose full scope cannot be predicted in advance.
How is time and materials different from fixed price?
T&M pays for the effort and materials actually used, so the final cost varies, while a fixed-price contract sets a single agreed figure regardless of the supplier's actual costs.

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