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⏱️ Time & Materials (T&M) Work

T&M work can be profitable if managed correctly, or a nightmare if you don't track and document properly. This guide covers how to do T&M right.

Key Principle

If you don't document it, you can't bill it. T&M requires meticulous daily tracking and immediate signatures.

When T&M Makes Sense​

Good Candidates for T&M​

  • Scope is undefined or constantly changing
  • Emergency or urgent work
  • Investigative/exploratory work
  • Small additions to larger contract
  • Work where scope can't be estimated

When to Avoid T&M​

  • Scope is clearly defined
  • Customer wants cost certainty
  • You can't get daily signatures
  • High-margin work (fixed price is better)

Setting Up T&M Agreements​

Essential Contract Terms​

Labor rates:

  • Fully burdened hourly rates by classification
  • Overtime rates (1.5x or specify)
  • Minimum hours per visit/day
  • Travel time (if billable)

Material markup:

  • Percentage markup on materials (typically 10-25%)
  • Handling and delivery charges
  • Small tools and consumables

Equipment rates:

  • Daily/weekly/monthly rates
  • Include operating costs or bill separately
  • Standby rates

Overhead & profit:

  • May be included in rates
  • Or added as line item (typically 10-15%)

Not-to-exceed:

  • Consider including a cap
  • Requires owner approval to exceed
  • Protects both parties

Sample Rate Schedule​

ClassificationStraight TimeOvertime
Superintendent$95/hr$142.50/hr
Journeyman$75/hr$112.50/hr
Apprentice$55/hr$82.50/hr
Laborer$45/hr$67.50/hr

Materials: Cost + 20% Equipment: Current rental rates Overhead & Profit: Included in rates

Daily Tracking Requirements​

T&M Ticket Contents​

Every ticket must include:

  1. Date and project name
  2. Work description (detailed!)
  3. Hours by employee (name, classification, hours)
  4. Materials used (quantity, description)
  5. Equipment used (type, hours)
  6. Owner/GC signature

Getting Signatures​

Daily is best:

  • Present ticket at end of each day
  • Review work with owner/PM
  • Get signature before leaving
  • If they won't sign, document refusal

If daily isn't possible:

  • Get weekly signatures minimum
  • Send summary emails daily
  • Take photos of completed work
  • Note any disputed items

What to Document​

Work description: ❌ Bad: "Installed pipe" ✅ Good: "Installed 45 LF of 2" copper supply line from mechanical room to 3rd floor restrooms per RFI #23"

Be specific about:

  • Location of work
  • What triggered the work
  • Reference to RFI, directive, or change
  • Existing conditions encountered
  • Why work took the time it did

Billing T&M Work​

Invoice Timing​

  • Bill weekly or bi-weekly
  • Don't let it accumulate
  • Attach all signed tickets
  • Include backup for materials

Invoice Format​

Include:

  1. Summary of work performed
  2. Labor breakdown (hours × rate)
  3. Material list with costs + markup
  4. Equipment charges
  5. Signed T&M tickets (attached)
  6. Material receipts/invoices (attached)

Example Invoice:​

T&M Invoice - Week of 1/15/2025

Work Description:
Installed temporary power per RFI #45 response.

LABOR:
John Smith - Electrician
  8 hrs ST @ $75.00 = $600.00
  2 hrs OT @ $112.50 = $225.00
Mike Jones - Helper
  8 hrs ST @ $45.00 = $360.00

Labor Total: $1,185.00

MATERIALS:
(3) 100A temp panels @ $285 + 20% = $1,026.00
(500') #6 THHN @ $0.85/ft + 20% = $510.00
Misc. fittings, hardware = $124.00

Materials Total: $1,660.00

EQUIPMENT:
Scissor lift - 1 day @ $175 = $175.00

Equipment Total: $175.00

TOTAL THIS INVOICE: $3,020.00

[Attached: Signed T&M tickets, material receipts]

Common T&M Problems​

"I won't sign that"​

Responses:

  • "What specifically do you disagree with?"
  • "Let's note your objection and sign acknowledging the work was performed"
  • "I need documentation to bill - what works for you?"
  • Document refusal in writing

"Those hours seem high"​

Prevent this by:

  • Getting daily signatures
  • Detailed work descriptions
  • Photos of work progress
  • Noting why work took longer (access issues, conditions, etc.)

"Your rates are too high"​

Response:

  • "These are the contract rates we agreed to"
  • "These rates include burden, overhead, and profit"
  • "Let's review the rate schedule in our agreement"

Unsigned tickets pile up​

Fix this by:

  • Making signature a daily requirement
  • Sending photos and summary emails
  • Escalating to PM if field staff won't sign
  • Requiring signature before leaving site each day

T&M Best Practices​

Daily Habits​

  1. Complete tickets same day - Don't rely on memory
  2. Get signatures immediately - Before leaving site
  3. Take photos - Of conditions, progress, and completed work
  4. Track materials precisely - Note every item used
  5. Record equipment time - When it arrived and left

Material Management​

  • Save all receipts - You'll need them for billing
  • Note markup clearly - In contract and invoices
  • Track by work order - Don't mix between jobs
  • Return unused materials - Adjust invoice accordingly

When Things Go Wrong​

If owner disputes work:

  1. Don't argue on site - Take notes and escalate
  2. Review your documentation - Photos, tickets, emails
  3. Request meeting - To resolve dispute
  4. Negotiate if needed - Some recovery beats none
  5. Document the resolution - In writing

Converting T&M to Fixed Price​

When to Offer​

  • After scope becomes clear
  • When owner wants cost certainty
  • When you can estimate accurately
  • When it's more profitable for you

How to Convert​

  1. Review T&M costs to date
  2. Estimate remaining work
  3. Add contingency (10-15%)
  4. Propose fixed price for remaining work
  5. Get written change order