Time and Materials Contract (T&M)
A Time and Materials (T&M) contract is a type of contract used in project management and procurement. In this type of contract, the customer pays the contractor for the actual hours worked as well as the cost of the materials used in the project.
Under a time-and-materials (T&M) contract, the contractor is paid an hourly rate for their time and the cost of any materials they use on the project. The contractor is in charge of keeping track of their time and money, as well as sending regular reports and invoices to the customer that list the work done, the hours worked, and the cost of the materials used.
T&M contracts are often used when the project’s scope and specifications are not clear or could change, and the customer wants to keep a lot of flexibility and control over the project. T&M contracts are also often used in consulting and professional services, where the work to be done can vary a lot and the client wants to know more about how the work is going.
Advantages of T & M Contract
One of the best things about a T&M contract is that it gives both the customer and the contractor a lot of freedom. The customer can change the scope and requirements of the project as needed, and the contractor can change their work hours and tasks to meet the customer’s new needs.
Disadvantages of T & M Contract
T&M contracts, on the other hand, can lead to higher costs and more risk for the customer because the final cost of the project may not be known until the work is done.
(To reduce this risk, customers may be able to negotiate a cap on the most that can be charged under a T&M contract or require the contractor to provide detailed cost estimates and regular progress reports).
Usage
It is used in Procurement Management / Contract Management