Time and materials (T&M) is a standard phrase in a

contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...

for

construction Construction are processes involved in delivering buildings, infrastructure, industrial facilities, and associated activities through to the end of their life. It typically starts with planning, financing, and design that continues until the a ...

, product development, or any other piece of work in which the employer agrees to pay the contractor based upon the time spent by the contractor's employees and the

subcontractors A subcontractor is a person or business which undertakes to perform part or all of the obligations of another's contract, and a subcontract is a contract which assigns part of an existing contract to a subcontractor. A general contractor, prime ...

' employees to perform the work, and for the

materials A material is a substance or mixture of substances that constitutes an object. Materials can be pure or impure, living or non-living matter. Materials can be classified on the basis of their physical and chemical properties, or on their ge ...

used in the construction or

manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the secondary sector of the economy. The term may refer ...

, plus the contractor's markup on the materials used, no matter how much work is required to complete construction. Time and materials is generally used in projects for which it is not possible to estimate the size of the project accurately, or when it is expected that the project

requirements In engineering, a requirement is a condition that must be satisfied for the output of a work effort to be acceptable. It is an explicit, objective, clear and often quantitative description of a condition to be satisfied by a material, design, pro ...

will most likely change. This is opposed to a

fixed-price contract A fixed-price contract is a type of contract for the supply of goods or services, such that the agreed payment amount will not subsequently be adjusted to reflect the resources used, costs incurred or time expended by the contractor. This contract ...

in which the owner agrees to pay the contractor a lump sum for fulfillment of the contract, no matter what the contractors pay their employees, sub-contractors, and suppliers. Many time and materials contracts also carry a

guaranteed maximum price A guaranteed maximum price (also known as GMP, not-to-exceed price, NTE, or NTX) contract is a cost-type contract (also known as an open-book contract) such that the contractor is compensated for actual costs incurred plus a fixed fee, which is lim ...

, which puts an upper limit on what the contractor may charge but allows the owner to pay less if the job is completed more quickly.

References

{{Contract types Business terms Contract law Pricing Procurement fr:Assistance technique