What Is Time and Materials (T&M) in Construction?
By Wyatt Cooper · Published · 3 min read
Key takeaways
- Time and materials pays for the hours actually worked at agreed hourly rates, plus materials and equipment at cost with an agreed markup.
- It is used when the work cannot be priced in advance, such as concealed conditions or urgent repairs, and usually carries a not-to-exceed amount.
- The record is the daily T&M ticket: workers, hours, materials and equipment, signed the same day by the GC or owner's representative.
Time and materials (T&M) is a way of pricing construction work by the actual labor hours at agreed hourly rates, plus the actual cost of materials and equipment, plus an agreed markup. It is used when the scope cannot be priced in advance, and it usually carries a not-to-exceed amount and daily signed tickets.
How T&M works
The federal definition shows the structure. A time-and-materials contract pays for "Direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit" and "Actual cost for materials". It may be used only when "it is not possible at the time of placing the contract to estimate accurately the extent or duration of the work", and it must carry "a ceiling price that the contractor exceeds at its own risk" (FAR 16.601).
On building jobs, T&M is most often a way to price one change. The City of Los Angeles issues a time-and-materials change order "to authorize the Contractor to proceed with the work within a specific not-to-exceed dollar amount, while documenting daily labor, material, and equipment costs" (LA Bureau of Engineering, 20.1). The signed tickets then become the backup for the change order, and the daily log should show the same crew on the same day.
Example
T&M ticket 0412: relocate panel feed
- Labor
- 2 electricians × 6 hrs × $95 = $1,140
- Material
- $380
- Equipment
- Scissor lift, 1 day: $220
- Markup on material and equipment (15%)
- $90
- Ticket total
- $1,830
- Not-to-exceed for the change
- $2,500
- Signed by
- GC superintendent, same day
The arithmetic: 2 × 6 × $95 = $1,140; $380 + $220 = $600, and 15% of $600 is $90; $1,140 + $380 + $220 + $90 = $1,830, under the $2,500 ceiling. Here the hourly rate already carries overhead and profit, as in the federal definition, so the markup applies only to material and equipment. Your contract decides which way it works.
T&M vs. lump sum vs. unit price
| Method | Price set | Who carries the quantity risk |
|---|---|---|
| Lump sum | Before the work, one total | Contractor |
| Unit price | Before the work, per unit; total by measured quantity | Shared: owner on quantity, contractor on the rate |
| Time and materials | After the work, from tickets, up to a ceiling | Owner, up to the not-to-exceed |
Converting T&M tickets into a priced change is covered in how to price a change order; a sub asking for T&M first sends a change order request.
The bottom line
Time and materials pays for what the work actually took, inside a ceiling, when nobody can price it up front.
Agree the rates and markup in writing first, get every ticket signed the same day, and watch the not-to-exceed. Conflo is built for commercial work today.
Sources
- FAR 16.601, Time-and-materials contracts — Acquisition.gov, U.S. General Services Administration. Read October 22, 2026.
- 20.1 Introduction (Construction Change Orders) — City of Los Angeles, Bureau of Engineering, Project Delivery Manual. Read October 22, 2026.
Questions
What is a T&M ticket?
The daily record of T&M work: date, location, workers by trade and hours, materials, equipment, and the signature of the GC or owner's representative who saw it.
What is a not-to-exceed amount?
The ceiling on T&M work. Going past it needs written approval first, or the extra may not be paid.
Is T&M the same as cost-plus?
They are close. Both pay actual costs plus a fee; T&M fixes hourly labor rates, while cost-plus usually reimburses actual labor cost plus a fee.
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