What is Time and Materials (T&M) Contract?
A time and materials contract pays for hours worked at agreed rates plus materials at cost — a hybrid sitting between fixed-price and cost-reimbursable. Rates are fixed (like FP); total spend is open-ended (like cost-plus).
It shines for staff augmentation and small, quickly-started work where scope will emerge. The risk is drift: hours accumulate with no natural brake, so mature buyers add not-to-exceed ceilings and review cadences. Exam cue: hiring skilled people fast without full scope → T&M.
Worked example
A retailer brings in two contract developers at $95/hour to reinforce its team through the holiday-season crunch, capped at 400 hours each. Nobody can define "help us survive December" as fixed scope — but the rate is locked, the ceiling is set, and work starts Monday.