What is often a key characteristic of Time and Materials contracts?

Time and Materials contracts typically involve a payment structure where the client pays the contractor based on the time spent on the project and the materials used. A key characteristic of these contracts is the monitoring requirements for cost control. Since the costs can vary based on the number of hours worked and the materials consumed, it is essential to implement monitoring mechanisms to ensure that expenses are kept in check and within the client’s budget.

This monitoring can include tracking hours worked, verifying the necessity and quality of materials used, and ensuring that the overall project remains aligned with the estimated budget. This characteristic contrasts with fixed-price contracts, where costs do not fluctuate based on labor or material inputs, thereby eliminating the need for stringent cost monitoring. In Time and Materials agreements, proper oversight becomes vital to prevent cost overruns and ensure that the project remains feasible for the client financially.