Time and Materials TM Contracts

Time and materials (T&M) contracts are a cross between fixed-price and cost-reimbursable contracts. The full amount of the material costs is not known at the time the contract is awarded. This resembles a cost-reimbursable contract because the costs will continue to grow during the contract's life and are reimbursable to the contractor. The buyer bears the biggest risk in this type of contract.

T&M contracts can resemble fixed-price contracts when unit rates are used, for example. Unit rates might be used to preset the rates of certain elements or portions of the project. For example, a contracting agency might charge you $135 per hour for a .NET programmer, or a leasing company might charge you $2,000 per month for the hardware you're leasing during the testing phase of your project. These rates are preset and agreed upon by the buyer and seller ahead of time. T&M contracts are most often used when you need human resources with specific skills and when you can quickly and precisely define the scope of work needed for the project.

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.

Get My Free Ebook

Post a comment