The city's facilities manager calls about the maintenance yard. The truck lanes are breaking up in places nobody can map until the old asphalt is cut out, and some of the base is probably gone. Nobody can price that honestly off a walk. "Just do it time and materials," she says, and you say yes.
Three weeks later the bill is $41,000. She had $20,000 in her head. Nobody lied. Nobody wrote anything down, either.
Four things time and materials work needs up front
Time and materials work goes smoothly when four things are agreed in writing before the crew rolls: the rates, a not-to-exceed cap, a daily ticket the customer's person signs, and a bill every week. When a T&M job turns into an argument, look for which one was missing.
Time and materials is the honest way to price work nobody can see: failed base of unknown extent, emergency repairs, a drain line that might be crushed. It isn't a way to skip estimating. If you can measure it, price it.
Put the rates in writing
The customer is agreeing to pay by the hour and by the ton without knowing how many of either. The least you owe them is a clear rate for each. Write down:
- Labor by role. Foreman, operator, laborer, each with a straight-time rate and an overtime rate, and what counts as overtime.
- Equipment by the hour, with any minimum, and whether the rate includes the operator. Say it either way, because that's the first line people argue about.
- Trucking, by the hour or by the load.
- Material at cost plus a stated markup, backed by the plant ticket or receipt.
- Equipment transport and setup, and what happens if the crew has to leave and come back.
Here's a sample rate sheet for the yard job. Use your own numbers.
| Item | Rate |
|---|---|
| Foreman | $95.00/hr |
| Laborer | $70.00/hr |
| Operator | $85.00/hr |
| Skid steer with attachments | $95.00/hr |
| Tandem dump truck with driver | $110.00/hr |
| Material | cost + 15% |
Set a not-to-exceed, and say what happens at it
A not-to-exceed cap turns "whatever it takes" into a number the customer's boss can approve. It protects you, too. A customer with a budget is a customer who can pay.
The cap only works if everyone knows what happens as the job gets close to it. Write it into the agreement:
- You'll tell the customer when the billed amount reaches 80 percent of the cap.
- Work stops at the cap unless the customer signs an increase.
- Nothing past the cap gets billed without that signature.
That last line is the one customers want to see. It's also what gets the cap approved quickly.
The daily ticket
Every day the crew works, a ticket gets filled out and signed by the customer's representative on site, that day. Not Friday. Not when the bill is disputed. That day.
The ticket shows who worked and for how long, the equipment and its hours, the material with quantities and tickets attached, and a line or two about what got done and where. Add photos of the area before and after. If there's no one from the customer on site, email the ticket that evening and ask for a reply the next morning.
A signed ticket settles a disputed line in one look. An unsigned one starts the argument over. Daily logs that back you up covers what's worth writing down on any job, T&M or not.
Here's day 1 at the yard, 10 hours:
- Foreman, 10 hr × $95: $950.00
- 3 laborers, 30 hr × $70: $2,100.00
- Operator, 10 hr × $85: $850.00
- Skid steer, 10 hr × $95: $950.00
- Tandem dump, 10 hr × $110: $1,100.00
- Asphalt, 22 tons at $78 plant price: $1,716.00, plus 15%: $1,973.40
- Day 1: $7,923.40
Bill every week
A $7,900 weekly bill gets looked at and paid. A $41,000 bill at the end gets audited, line by line, by someone who wasn't there.
Bill weekly, with the signed tickets attached, and show the running total against the cap. Say the cap on the yard is $40,000, and every day runs about like day 1:
- After day 4: $7,923.40 × 4 = $31,693.60, which is 79 percent of the cap
- After day 5: $39,617.00, which leaves $383 before the cap
So Thursday night you already know. Friday's work fits under the cap, and Monday's won't. The call to the facilities manager happens Friday morning, with four signed tickets, photos of what's been cut out, and an honest estimate of what's left. If she signs a $20,000 increase before the crew leaves Friday, Monday starts on schedule. If she doesn't, the crew goes to another job on Monday and nobody is surprised.
Compare that with the three-weeks-later version. Same work, same rates, and a customer who feels ambushed.
When a line gets disputed anyway
Pull the ticket for that day. If it's signed, the conversation is short. If it isn't, you're negotiating.
Take the disputed line out of the bill and bill the rest. Resolve the line separately, and don't let a $950 question about the skid steer hold up $7,000 of hours nobody questions.
Don't bill anything the rate sheet didn't mention. Small tools, fuel surcharges and cleanup time all have to be on the rate sheet first. Added afterward, they look like padding even when they're fair.
T&M inside a fixed-price job
A lot of T&M work doesn't come as a whole job. It comes in the middle of one. The paving is priced, but the base under the old loading dock is anybody's guess.
That piece can go on a change order written as T&M, with its own rates and its own cap, while the rest of the job stays at the price the customer signed. The proposal stays a proposal. The unknown gets a budget and a daily ticket.
Where Pavr fits
Pavr is job management software for paving, sealcoating, striping and concrete contractors. A T&M job bills weekly from approved hours, material and receipts. The office hears about it at 80 percent of the not-to-exceed, and billing stops at the cap. A T&M change order on a fixed-price job gets its own cap, and the rest of the job bills the way it was signed.
Questions contractors ask
Should I mark up material on time and materials work?
Yes, if the agreement says so. State the markup as a percentage on the rate sheet and attach the tickets or receipts, so the customer can see the cost behind it.
How do I pick a not-to-exceed amount?
Estimate the work as well as you honestly can, then set the cap a little above it, with a clear step to raise it. A cap set too low means stopping the crew for a signature halfway through.
How does overtime work on a T&M job?
Put an overtime rate for each role on the rate sheet, and say what triggers it. If the customer asks for Saturday work or a 12-hour day, the ticket should say so.
What if the customer's rep won't sign the daily ticket?
Email it that day with photos and ask for a reply. If tickets keep going unsigned, stop and settle it before the next day's work, not after the bill is disputed.
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