What is Time and Material Contract in Project Management

Project management has plenty of variables. And to facilitate them, several contractual arrangements have been developed to meet the needs of the parties involved. One of the most common such instruments is the time and material contract. So, what is time and material contract in project management?

What is Time and Material Contract in Project Management

What is Time and Material Contract in Project Management
What is Time and Material Contract in Project Management

For those that are managing a construction project you may have come across T&M contracts. In this article, we’ll discuss time and material contracts and how they operate. We’ll also highlight some benefits of this type of contract.

A Time and Material Contract is a type of contract where the client agrees to pay the contractor based on the materials used, time spent on the project as well as a profit or markup. It’s also often referred to as a cost-plus contract.

This differs from the fixed price contract where the client commits to pay the contractor a fixed sum for completing the contract regardless of the amount of materials, labor and so on used. Time and Material contracts are primarily used where it’s difficult to accurately describe the extent of works required, or where requirements and specifications are likely to change over the project’s lifetime.

Items Included in a Time and Material Contract

Labor rates: this refers to the amount to be charged for the workforce. It may also include taxes, insurance and so on.

Material mark-up: it’s unusual for the contractor to charge the client the retail price for materials and then add a markup if they already have a pre-agreed wholesale price with the supplier.

Not-to-exceed: this is a maximum guaranteed price which places an upper limit on what the contractor can charge the client.

Advantages of a Time and Material Contract

There are several benefits to having time and material contracts. Read below for some advantages: 

What is Time and Material Contract in Project Management
What is Time and Material Contract in Project Management
  • It provides the client with transparency, which gives them the freedom to verify timesheets and invoices to ensure costs are correct.
  • It allows for greater flexibility 
  • Although there is a general limit on the profit, a contractor can proceed with a project with the confidence that they’re going to recover their expenses with some profit. This helps to avoid cost-cutting.
  • It saves time in the initial budgeting and estimation process which can be done later on in the project albeit with a much higher level of accuracy and detail
  • It allows for work to progress even if there’s no concrete plan on how the project will be completed

Bottom Line

With the tips mentioned, you can now answer the question: what is Time and Material Contract in project management. These types of contracts make the most sense for jobs where it might be difficult to predict how much time and material will be required to complete the whole project or where the scope of work might change. Time and materials contracts can help to simplify the paperwork on the front end, but they also require much more work on the back end. For information about what T&M is and how it can benefit you, contact our experts at DataStreet for follow-up info.

When it comes to construction, it’s important to have a labour manager to help you organize the project. Managing all the labour can be very challenging. This is mainly because you want to make sure that you have the right people, with the right expertise, and are able to have adequate productivity in order to get the job done on time. Often times, this requires some experience and skill sets from the labour manager themselves. Fortunately, there are techniques and strategy that the labour management in construction can take to get the projects done efficiently and on time.

Labour Management in Construction


The first thing to do is to know the deadline. Usually it would take about six months to a year to construct a house and could be longer to construct other buildings. However, you also want to know if the deadlines can change or not. Keep in mind that in the world of construction, everything is unpredictable. Mother nature plays a huge role. If it’s raining, your worker’s productivity can be compromised. If there are other issues like the wind, fire, or anything, it can affect the way your workers do their job. That is why it’s best to talk to the owner about the flexibility of the deadlines so you will have adequate time.

Construction Labour Management App
Construction Labour Management App

Size of the Job

You want to observe the size of the job to make sure that it fits well with the deadline. If the construction involves a huge project, then you want to make sure that you have ample amount of time. If you don’t have enough time, the quality of your work can be severely compromised. Therefore, it’s essential to have the experience to know how long a certain project will take.

How Many People You Need

Based on the size and the deadline for the construction project, it’s important to get enough construction worker for the job. You want to assess the different roles that these workers will be and how many of them you need. The good part is that if you didn’t get enough people, you can always hire more. Sometimes, you would have to do the project in order to realize that you either have too much work or not enough.


It’s important to get construction workers with a good amount of experience and referral. You want to see what type of projects that need to be done, and what type of expertise that you’re looking for. This will help you select the right construction workers for the job.

Labour Management in Construction
Labour Management in Construction

Once you figure everything out, you can start budgeting. You need to determine the cost of the material and the amount you will be paying your construction worker per hour. This will entail factory in the deadline and how many hours a day that they will be working. Once you get the budget, you have to determine if you have enough money. If you don’t, then the company will have to provide you with more revenues to get that project done. Keep in mind that the cost of the budget is usually an approximation so you might need to pay more or less depending on the situation. DataSheet provides a platform to help ease your labour management in construction.

How to Manage a Construction Project

Every construction project has objectives that need to be met. There’s plenty of activities involved in any typical construction project, so it’s essential to have the right set of skills and expertise to manage the project effectively. At the most fundamental level, your role in managing a construction project will be to plan, coordinate, budget and supervise the construction project from the beginning to the end. Here are a few tips on how to manage a construction project.

Construction Project Management

The main concept of managing a construction project is closely related to technical parameters such as execution and budgeting, but it also requires solid communication between all parties involved (contractors, community, stakeholders). Nonetheless, managing a construction project typically extends to a broad range of functions including:

  • Specifying the project goals and plans including drawing of the scope, scheduling, budgeting, choosing participants in the project and deciding upon achievement requisites.
  • Acquisition of the necessary equipment and personnel to ensure the effective use of resources.
  • Conducting various operations through the legitimate coordination and management of planning, contracting, design, estimating and construction throughout the project.
  • Developing a stable communication channel between agents for resolving any conflicts that may arise.

How to Manage A Construction Project
How to Manage A Construction Project

The Project Management Process

Every construction project, regardless of its characteristics, has a standard life-cycle. As such, managing a construction project can be divided into four stages:

  1.    Project Initiation

This phase starts by determining the objective and feasibility of the project. It’s a critical stage of the entire process because it can indicate whether the project is viable or not. If necessary, you may have to carry out a feasibility study that will inform your plan.

Once, you’ve decided on everything, create a project initiation document (PID) which provides the groundwork for the construction plan.

  1.    Project Planning

Also referred to as scope management, this stage involves singling out all the work to be done. It’s a continuous process through to the end of the project. Your main priority, however, will be to plan resources, time and cost for the project. You’ll also have to prepare a checklist that breaks down all the work into smaller, more functional categories. (consider leveraging construction scheduling software for this)

As soon as you define the budget, schedule, and work, the project is almost ready to kick off. The next step will be to examine all potential threats and come up with solutions.

  1.    Execution

The execution phase involves putting your project management plan to work. Typically, this phase involves two main processes: the executing and the monitoring and controlling. You’ll have to ensure that tasks are being performed while concurrently monitoring progress and making changes accordingly.

  1.    Closing Phase

This is the final phase when the project is complete. In the end, you should conduct a project report, calculate the final budget and give details about any incomplete tasks. Take time to evaluate what went well and refer to potential failures.

Construction Project Management
Construction Project Management

Managing a construction project can be a real challenge. There are plenty of elements and parameters you should analyze exhaustively. Take advantage of construction management software to make life easier and give you an opportunity to take your construction project to greater heights. DataStreet offers contractors an easy and efficient way to manage their time and material.