TIME & MATERIALS AGREEMENT (T&M)
Although similar in some respects to a Cost Plus Agreement, a Time & Materials Agreement is very different in application. T&M Agreements are usually open ended without any check upon costs or time. T&M work may be encountered in response to some emergency occuring on site wherein it is impossible to anticipate the magnitude of cost or time impacts. It is rare for an owner to engage a Contractor with a pure T&M request. Hours and costs are typically reviewed and signed off by the person issuing the contract on a daily basis, and they are reimbursed at actual cost rates.
Contractor Risks: Documenting the time and materials forming the basis for reimbursement is a difficult task and must be accomplished on a daily basis.
Owner Risks: The work is difficult, if not impossible to check and always seems to add up to more than the expected (hoped for) cost or time impact.