Time and materials, or T&M, is pricing where the customer pays for the actual labor hours, equipment hours and material used, at rates agreed in the contract, for work that couldn't be priced up front.
On paving and concrete jobs it covers the unknowns that are hard to unit-price: undercutting soft subgrade of unknown extent, working around an unmarked utility, or standby time the customer caused. The proposal states the rates ahead of time (labor per hour by role, each piece of equipment per hour, materials at invoice plus a markup), so a T&M authorization signed on site commits the customer to those rates without a new proposal. Many customers will want a not-to-exceed amount on it.
What makes T&M hold up is the record: hours and material logged every day against the authorization, and billed as their own lines so the customer can see what the extra work cost.