What is time and materials work?
Time and materials, or T&M, bills the hours worked, the equipment used and the materials installed at agreed rates, rather than a single fixed price. It moves the risk of the unknown from the contractor to the customer, which is exactly why customers resist it.
Fixed price says: this is the number whatever happens. T&M says: this is the rate, and we will count what it takes. Dirt work runs into unknowns that nobody can price honestly from the surface, so T&M is the fair answer when what is underground decides the cost: a leak nobody has located, a repair behind a failure, an emergency at 2am.
What it costs you
Two things, usually. The customer with no ceiling gets nervous and starts managing your crew by the hour. And every dollar you cannot prove on paper is a dollar you argue about later. A not-to-exceed figure solves the first: T&M rates, with a cap you will not pass without approval. Tickets solve the second.
What a ticket needs
- Date, and hours by person, at the agreed rate.
- Equipment by unit and hours, including standby if the contract allows it.
- Materials, with quantities, and the supplier ticket attached.
- What was done and why, in a sentence a stranger can follow.
- A signature from someone on the customer's side, the day it happened.
The signature is the part people skip and the part that decides disputes. A photographed, signed ticket from the day of the work settles an argument three months later; a memory does not.
Rates are not your costs
A T&M labor rate covers the wage, the burden, the overhead and the profit, which is why it is well above what the hour costs you. The same goes for machines. If you bill your own equipment at the rental rate you pay someone else, you are working for nothing on the iron.