Time and materials

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Time and materials (T&M) is a standard phrase in a contract for construction, 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 subcontractors employees to perform the work, and for materials used in the construction (plus the contractor's mark up on the materials used), no matter how much work is required to complete construction. Time and materials is generally used in projects in which it is not possible to accurately estimate the size of the project, or when it is expected that the project requirements would most likely change. [1]

This is opposed to a fixed-price 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, which puts an upper limit on what the contractor may charge, but also allow the owner to pay a lesser amount if the job is completed more quickly.

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<span class="mw-page-title-main">Lump sum contract</span>

A lump sum contract in construction is one type of construction contract, sometimes referred to as stipulated-sum, where a single price is quoted for an entire project based on plans and specifications and covers the entire project and the owner knows exactly how much the work will cost in advance. This type of contract requires a full and complete set of plans and specifications and includes all the indirect costs plus the profit and the contractor will receive progress payments each month minus retention. The flexibility of this contract is very minimal and changes in design or deviation from the original plans would require a change order paid by the owner. In this contract the payment is made according to the percentage of work completed. The lump sum contract is different from guaranteed maximum price in a sense that the contractor is responsible for additional costs beyond the agreed price, however, if the final price is less than the agreed price then the contractor will gain and benefit from the savings.


  1. Korotya, Eugeniya. "Time-and-Materials vs Fixed Price: Which to Choose for Your Project?". Medium. Retrieved October 20, 2018.