A Time & Materials Contract is a fee structure by which the contracting firm is paid for time and materials spent, meaning it is paid for labor and it other direct job costs. Hourly labor rates are negotiated and established in advance of performing the work. In T & M contracts, labor rates are fully loaded, meaning that they include all labor rated expenses (burdened labor costs) along with overhead and profit built into the hourly rate. T& M contracts are generally used when it is difficult or impossible to determine a scope of work in advance and are often high reward, low risk, low volume. A T & M contract is similar to but not the same thing as a Cost Plus Fixed fee Contract
(adapted from Project Management for Design Professionals)
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