Time & Material (T&M)
A Time and Material, or T&M, contract is a "hybrid" — it blends features of two other contract types. The buyer pays the seller for two things: the TIME workers spend (usually billed at an agreed hourly or daily rate) and the MATERIALS they use (the physical stuff, billed at cost or an agreed price). Add those together and you get the final price.
Calculating it in words: multiply the hours worked by the agreed labor rate, add the cost of materials used, and that's the bill. The word "f(time, material)" just means the price is a function of — that is, it depends on — both of these ingredients.
Read it like this: the price isn't fixed up front, so it can grow if the work drags on or uses more materials than expected. That flexibility is exactly why project managers reach for T&M when the full scope of work isn't clear yet — like emergency repairs, small jobs, or bringing in extra staff whose exact hours aren't known. Because open-ended time can get expensive, buyers often protect themselves by adding a "not-to-exceed" cap (a maximum total) or a time limit.
Think of it like calling a plumber for a leak nobody can fully size up in advance. They charge you their hourly rate for the time they're there, plus the cost of any pipes and fittings they install. You don't know the exact final bill until the job's done — which is fine for uncertain, smaller work, but you'd probably ask for a rough cap so it doesn't spiral.
Say you hire a consultant at an agreed rate of $100 per hour, and they also buy $500 of materials for the job. Over the week they work 40 hours. The labor portion is 40 hours × $100 = $4,000. Add the materials: $4,000 + $500 = $4,500 total. The result shows the final cost depended entirely on how long the work took and what supplies were needed — if the consultant had worked 50 hours instead, the bill would have risen to $5,500.
Every PMP formula explained free — plus worked examples and practice in PMP Math, and full timed mocks in the simulator.