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.

Managing the construction project impacts the whole project. If the project is done correctly, it is finished on budget and on time, but incorrect procedure increases the costs and the time the project is completed. That is the reason there are courses and apprenticeships to guarantee that project directors know everything that they should do to finish an effective project. Here are nine stages of dealing with a construction project.

Build up Project Road-delineate

Here at Data Street we understand the initial phase in dealing with a construction project is building up a project guide. A typical misconception of a project guide is that it is a complete arrangement for how the project will start.It is a review to more readily comprehend what requirements to occur with a specific end goal to fabricate a genuine calendar.

Characterizing Roles and Responsibilities

The second step in dealing with a construction project is to completely characterize the parts and obligations of partners and others. This can be utilized to figure out who will truly need to endorse of what. Inside construction projects, there are partners who probably won’t be enter in endorsing a particular piece which is the reason they shouldn’t be in charge of it.

How to Manage a Construction Project Step by StepThe Total Key-holder Meeting

This is a critical advance in dealing with a construction project. This gathering is the place a greater amount of the arrangement begins to meet up. It’s additionally an incredible place to guarantee that everybody included comprehends what’s expected of them, what’s to come and answer any inquiries.

Setting Scope and Baselines

The following stage in dealing with a construction project is getting the extension and baselines into composing. The extension must be set with a specific end goal to guarantee everybody taking a shot at the project realizes what they should do. Setting a particular extension likewise restricts the measure of degree sneak in a project.


This following stage is normally where a project begins to come to fruition. Building up the calendar and getting everybody to consent to it is a standout among the most vital strides in dealing with a construction project. To make a calendar, the project administrator must recognize the majority of the vital parts and steps.

Building up the Modification Process

Project administrators shouldn’t neglect, the change procedure is amazingly critical in construction. Things occur, changes must be made, and in construction that can mean hundreds or thousands of dollars. The alteration procedure enables key-holders to know where to send change orders and the fitting reaction time. This keeps individuals from losing change orders

Manage a Construction Project Step by StepCreating and Implementing the Quality Plan

Presumably a standout among the most vital components of project management is the quality control and quality confirmation plan. Having an early quality control and quality affirmation plan that begins from the earliest starting point of the project is better generally speaking.

Building up a Communication Plan

A correspondence plan is an impact advance in dealing with a construction project. This guarantees key holders aren’t being reached on little things, and key-holders reaching the right individual in the event that they have questions


When construction begins the part of project director changes marginally. They are as yet in charge of dealing with the construction project, yet now they are taking a gander at the advancement utilizing the key pointers built up before. Remaining over the project execution, key markers, and correspondence makes it less demanding to prevent a project from coming up short. This is where it’s vital to ensure installment plans are set up and working accurately