Many builders show their disdain for
the competitive bidding process by
declaring "I only do time and materials
work." While T&M protects you from
certain risks, such as underbidding your
labor or missing change orders, I've
come to believe that T&M work can be
every bit as dangerous as competitive
bidding, but in different ways.
Two very different billing arrangements
are often lumped together under
this broad heading. One variation,
called cost-plus, usually includes a "notto-
exceed" budget to limit project cost.
Materials and subcontractors are billed
at invoice cost; hourly labor charges
include labor burden; and overhead and
profit, sometimes called a "contractor's
fee," are broken out separately.
In another variation, labor is usually
billed the same way, but