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What is T&M?

October 22, 2020

Curious what is T&M? The time & material (T&M) contract is based on real-time spent on a project and is an hourly basis or man-day rate. T&M is a different approach to a project than using a fixed price model contract. The fixed price contract look less risky; for, you know the aggregate cost of the project before it goes to the next level - development. However, in reality, it’s not beneficial for the employer/owner/investor.

What is Time and Material
What is time and material tracking?

Time and Material (in other words T&M)

Benefits of a T&M Contract:

The Final Product can be Modified as Needed

In the T&M contract, as the employer/owner/investor, you can get the product modified as you may require. Because of constant changes in products, it’s important to make the necessary changes in the product to suit the needs of the end user. If the work involves developing a product, there is enough scope to adjust the functionality, or simplifying the product.

Because you Finalize the Product, it's Per Your Will

The investor considers the suitability of the product at every stage. This will make it possible for the contractor to make the product exactly what the investor/employer/owner desires for that particular phase or phases of  a construction project.

It Enables Saving

The employer needs to pay only for the actual project work executed. This will help save time as well as money spent on the project.


Does a T&M contract allow for transparency? Yes, it does. The details sent by the contractor with respect to work such as invoices can be easily verified by the employer.

In Which Case Should I Choose a T&M Contract?

If you’re an independent contractor, consider T&M contracts if:

  • The project is meant for the long-term and involves dynamic attributes including the composition of the work (design, development, etc.).
  • The project scope is not clear.

If you are a client/employer/investor, and going for a T&M contract, consider these carefully:

  • Rate - When you're negotiating a T&M contract, ensure to know the rate in detail. Check if it is valid until the close of the contract. If a daily rate is specified, ensure you get the worth of your money. Some personnel such as supervisors need not charge full pay. To economize the cost, make sure they are also in the belt of hourly-payment.
  • Check invoices carefully - Review the invoices. Check how many hours each employee is working and charging for their role. You can find that people at the top take the most money.
  • Communication – Keep on communicating with the service provider. Get weekly updates on your project. Tally the progress in the project with the additional money you spent.
  • Material procurement - If you are familiar with the material required for the project, it is better you buy them because in case the contractor buys them, they pad the cost. The money you save by buying the material yourself can be placed back into the project.
  • Change order - T&M contacts don’t mention what to be delivered. Yet, you should play a proactive role – you may have to do some changes. Add more hours; raise the number of team members, etc. Any change you intend to make has to be done by sending a Change Order. The crux of the matter is you should be the decision maker.

What is T and M

So, what is T&M? Time and Material contracts allow you to pay for materials and labor to be done in a certain amount of time. This is different from fixed-labor contracts because those don’t limit to a certain time frame. DataStreet provides solutions to subcontractors in the field for their T&M contracts and any change orders necessary.

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