Contracts & ExecutionQuestion 823 of 1605
In a time-and-materials (T&M) contract, the contractor is compensated based on:
a.A price per completed unit only
b.A guaranteed maximum with no cost tracking
c.One fixed lump-sum price agreed at the outset
d.The actual labor hours worked at agreed rates plus the cost of materials (often with markup)
Explanation
A time-and-materials contract pays the contractor for actual labor hours at agreed hourly rates plus the cost of materials used, frequently with an agreed markup on materials for overhead and profit. It is well suited to work of uncertain scope, such as repairs or troubleshooting. It differs from a fixed lump sum, from unit pricing (per unit of quantity), and requires accurate records of hours and material costs to support invoices.
Practice all 1605 questions free — no signup required.
Related questions on this topic
- Under a cost-plus contract, the contractor is typically paid:
- A 'cost-plus with a guaranteed maximum price (GMP)' contract protects the owner by:
- A unit-price contract is most appropriate when:
- Which contract type places the greatest risk of cost overruns on the contractor rather than the owner?
- A liquidated damages clause in a construction contract is best described as:
- For a liquidated damages clause to be enforceable rather than struck down as a penalty, courts generally require that:
Last reviewed: · editorial process
Sen Lin, PrepPass Founder · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)