Monthly Archives: May 2013

Time and Material Contracts in Home Construction

There is a form of contracting prevalent in the home construction world that is very dangerous to the American homeowner. It is called the time and material contract. In construction slang it is known as “T & M.” This contract is the cause of run away costs on seemingly inexpensive home construction projects. The wise homeowner will be very, very wary of signing a time and material contract with any home construction contractor.The basics of the time and material contract are quite simple.

The contractor charges the homeowner for the actual time that all workers spend on the homeowner’s project plus all the costs of materials.The T & M contract is almost always suggested by a contractor to an inexperienced homeowner. They will say that the homeowner’s job is just too complicated for a fixed price bid and the best way to do this project is by time and material. It always sounds so reasonable that the homeowner has no reason to believe that things will not go well on their project.

The time and material contract has been around for decades. It became very popular in the late 1970’s and 1980’s on industrial construction projects around the globe. The time and material contract was used on large scale industrial projects where it was thought that the teaming of the owners and the owner’s contractor would result in a win-win situation for both the contractor and the owner.