Some construction projects are ambiguous. You go into them knowing that you will need to be flexible so that your client can make changes as the project goes on.
Choosing a contract that corresponds to your project’s needs can allow both parties the ability to make changes as the needs of the project change. The next type of agreement in the construction contract series is the time and materials contract.
These are some highlights about how a time and materials contract works and when to use it.
What does it do?
Very simply, a time and materials contract is exactly what the name suggests, an agreement based on the time spent and the materials used on the project.
Similar to lump-sum contracts, time and materials contracts make negotiation simple since there are only a handful of details to agree on, such as:
- Hourly rates for work
- The markup on supplies and materials
- Limits on the cost of the project
An essential part of a time and materials contract is accurate tracking. Both parties should discuss the tracking and reporting methods for costs incurred during the project.
When should I use it?
A time and materials contract allows for substantial flexibility for both parties. There is room to make changes to the project and make adjustments for delays or supply shortages.
Time and materials contracts offer flexibility for both construction companies and their clients. To make sure your construction contract will be enforceable, it is important to talk to a trained professional about drafting your agreement.