T&M (Time & Materials)

Time & Materials (T&M) is an official business definition of a contractual arrangement in which payments are based on the actual process value of labor and materials used for completion of work. This type of procurement agreement typically involves services which are characterized by unique or variable scope that cannot be easily specified in advance, such as consulting services or repairs. Under this contract, the provider agrees to provide labor and/or equipment at set hourly or daily rates rather than fixed prices, with payment made upon completion of each unit of service. In order to ensure predictable and fair pricing, the purchaser must closely monitor expenses and progress to measure performance against agreed-upon terms.