A time and materials (T&M) contract pays the contractor an hourly rate for labor (typically by trade and skill level) plus the actual cost of materials with a stated markup. The contractor tracks hours and material receipts and bills against actual usage rather than against a fixed price.
T&M is most appropriate for small repairs, emergency work, or projects with genuinely undefined scope where neither party can responsibly estimate a fixed price. The trade-off is that owners carry overrun risk and must trust the contractor to log hours honestly. Many T&M contracts include a not-to-exceed (NTE) cap to limit owner exposure. Detailed time logs with daily summaries and clear material receipts are standard practice on T&M work.