What do time and materials contracts typically include?

Time and materials contracts commonly include fixed rates per hour or day for labor, along with associated material costs. This structure is designed to compensate the contractor for the actual time spent on the project and the specific materials used, which means that costs can vary based on the length of time the project takes and the quantities of materials required. This type of contract is particularly useful in situations where the scope of work is not precisely defined, allowing for flexibility and clear accountability regarding labor and material expenditures.

The inclusion of fixed rates provides clarity for both the service provider and the client, ensuring that there is an agreed-upon cost for labor, while material costs are typically billed at actual incurred expenses. This format helps in managing budget expectations, as the client can anticipate costs more accurately based on the ongoing project work.