Time and Materials Contracts

Time and materials (T&M) contracts are sometimes called unit price contracts. They are ideal for instances when an organization contracts out a small project or for instances when smaller amounts of work within a larger project are to be completed by a vendor. T&M contracts, however, can grow dangerously out of control as more work is assigned to the seller. While time and materials is an easy-to-create and administer-contract type, they can pose a threat to the buyer if a "not-to-exceed" clause is not included in the contract. A not-to-exceed clause states the maximum amount of monies the vendor can bill for the contracted work. Figure 12-3 is an example of how T&M contracts can pose a risk for the buyer.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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