time and materials (T&M) contract

  

Definition

An arrangement under which a contractor is paid on the basis of (1) actual cost of direct labor, usually at specified hourly rates, (2) actual cost of materials and equipment usage, and (3) agreed upon fixed add-on to cover the contractor's overheads and profit.

Use this term in a sentence

  • When I renovated my basement, it made sense to use a time and materials contract with my contractor, since the job was somewhat open-ended, since I wasn't sure exactly what I wanted.

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  • Our time and materials contract was in place and I was excited to get things under way after a long delay.

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  • Due to the requirements of your work not being clear, we can enter into a a Time and Materials Contract for the Phase 1 of the project.

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