What is a Time and Material Contract (T&M)?

A Time and Materials (T&M) contract is similar to paying for services based on the time spent and materials utilized. It’s similar to hiring someone to make a custom piece of furniture in which you pay for the hours worked and the materials used. The customer pays for the actual hours spent by the project team as well as the materials used throughout the project under a T&M contract. This sort of contract provides flexibility, especially when the scope of work is not totally apparent upfront, but it also means that prices may rise if the project takes longer or requires more materials than anticipated.