How does a time and materials contract work?

Time and materials (aka T&M) is a standard phrase in a contract for construction, product development or any other piece of work in which the employer agrees to pay the contractor based upon the time spent by the contractor's employees and subcontractors employees to perform the work, and for materials used in the ...

What is the difference between T&M and fixed price?

Fixed price is exactly as the name suggests. A software provider will define a scope of work with your help, and then deliver that exact scope of work for an agreed upon price. With T&M, you are billed for the time and any related costs associated with the project as they occur.

Does time and materials include travel?

Travel is not a materials cost; the payment clause for time-and-materials contracts says nothing about travel. ... The agreement may include an allowance or amount for administrative costs as well as actual travel costs and something for profit or fee, but not on a cost-plus-percentage-of-cost basis.

What is a time and materials contract How is it different from a labor hour contract?

How is it different from a labor-hour contract? (2) Actual cost for materials (except as provided for in 31.205-26(e) and (f)). NOT A FIXED TYPE CONTRACT. A labor-hour contract is a variation of the time-and-materials contract, differing only in that materials are not supplied by the contractor.

Time and material (T&M) pricing. Time and Material is an engagement model in which the client pays only for time and resources spent on the project. It supports an agile development process.

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What signing a time and materials contract entails

A time and materials contract documents hourly labor, materials, and expenses tied to a project and is commonly used where scope or duration is uncertain. When executed electronically, it combines a clear statement of rates, change-order handling, and invoicing terms with an eSignature record that captures signer intent, authentication, and a tamper-evident audit trail. In the United States, enforceability typically depends on meeting ESIGN and UETA requirements, maintaining accurate records, and applying reasonable authentication and consent procedures during execution.

Why use electronic signatures for time and materials contracts

Electronic execution reduces turnaround time, centralizes records, and creates an auditable trail that supports billing and dispute resolution, while integrating with common document and project management systems for operational efficiency.

Common challenges when signing time and materials contracts

Unclear rate tables or lack of frequency for rate updates create billing disputes and require detailed amendment handling.
Inconsistent change-order processes lead to unapproved work and difficulty reconciling hours with authorized scope.
Delayed signatures extend project timelines and complicate interim invoicing and cash flow for contractors.
Insufficient authentication or incomplete records increase legal uncertainty and complicate enforcement under ESIGN and UETA.

Representative roles who prepare and sign these contracts

Project Manager

Project managers prepare scopes, track hours, and approve change orders; they need clear rate tables, delegated signing authority, and easy access to signed agreements for invoicing and audits.

Contractor

Independent contractors or subcontractors submit time records and material receipts, require simple signing flows, and benefit from secure copies and audit trails to support payment claims.

Typical users of signed time and materials contracts

Independent contractors and staffing firms documenting billable hours and material costs for clients.
Professional services teams such as IT, engineering, and consulting firms tracking time against open-ended engagements.
Procurement and legal teams ensuring contract terms, rates, and change orders are consistently recorded.

Consistent electronic signing practices help these users reduce administrative burden and preserve enforceable records for billing and audits.

Security and integration features that support compliant signing

Robust technical and integration capabilities reduce risk and integrate signed contracts into billing and project systems for operational continuity.

Authentication

Multi-factor and identity verification options help confirm signer identity and support higher evidentiary value when enforcing contract terms in the U.S. legal environment.

Encryption

Strong encryption protects documents both in transit and at rest, reducing the risk of unauthorized access to sensitive billing and personnel data.

Mobile Signing

Responsive signing on mobile and tablet keeps approvals timely when field teams or contractors need to sign from job sites or remote locations.

Integrations

Built-in connectors to project management, accounting, and cloud storage systems streamline data flow from signed contracts into invoicing and reporting processes.

API Access

APIs allow programmatic creation and signing of contracts, enabling automated generation of time and materials addenda and system-driven signature requests.

Permissions

Granular role and permission controls restrict who can edit templates, send agreements, and view signed documents, supporting internal compliance and segregation of duties.

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Document features that improve time and materials agreements

Certain document and workflow features make time and materials contracts simpler to manage and reduce the risk of billing errors and disputes.

Templates

Reusable contract templates preserve consistent rate tables, change-order clauses, and signature blocks so teams can deploy standardized agreements quickly and reduce negotiation overhead across recurring engagements.

Custom Fields

Custom fields capture project IDs, hourly rates, material codes, and approval checkboxes to ensure every signed contract includes the structured data needed for invoicing and ERP reconciliation.

Bulk Send

Bulk Send enables sending identical time and materials agreements or addenda to multiple recipients, reducing manual distribution effort while tracking individual recipient execution and status.

Audit Trail

A complete, tamper-evident audit trail records who signed, when, and what actions occurred, providing admissible evidence for billing disputes and regulatory reviews.

How electronic signing flows for time and materials contracts work

A typical eSigning sequence guides document preparation, signer verification, and finalization while preserving an immutable audit trail for each contract.

Upload document: Import contract or template into the signing system.
Prepare fields: Place signature, date, and rate table fields.
Authenticate signer: Use email, SMS, or stronger authentication methods.
Finalize: System timestamps and stores completed agreement.

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Step-by-step: prepare and sign a time and materials contract

Follow a concise sequence to prepare a clear agreement, collect signatures, and keep records that support billing and compliance.

01

Draft terms: Define hourly rates, materials, and invoicing cadence.
02

Add change-order process: Specify approval steps and rate adjustments.
03

Assign signers: Designate authorized client and contractor signatories.
04

Execute and archive: Capture signatures and store an auditable copy.

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Recommended workflow settings for time and materials contracts

Configure workflow defaults to standardize approvals, reminders, and archival behavior for consistent contract administration.

Feature	Configuration
Reminder Frequency	48 hours
Signature Routing Mode	Sequential
Authentication Level	Email or SMS
Document Retention Period	7 years
Auto-archive Completed	Enabled

Platform and device requirements for signing agreements

Desktop browsers: Chrome, Edge, Safari supported
Mobile platforms: iOS and Android apps available
Connectivity: Stable internet recommended

Using modern browsers or the vendor's mobile app reduces errors, supports richer authentication options, and ensures access to audit logs and signed document downloads.

Security controls relevant to signing time and materials contracts

Encryption in transit: TLS 1.2+

Data encryption at rest: AES-256

Access controls: Role-based permissions

Audit logging: Comprehensive event log

Compliance attestations: SOC 2 options

Regional data options: US data residency

Industry examples of signed time and materials contracts

Practical examples show how electronic signing and clear templates reduce friction across common industries that rely on variable-scope work.

IT services engagement

A mid-sized IT firm uses a standard time and materials contract to cover on-demand work and emergency support

standardized hourly rate schedule reduces negotiation time
integrated timesheets tie hours to invoices

Resulting in faster billing cycles, clearer client expectations, and documented approvals that support collections and audit readiness.

Construction subcontract

A subcontractor executes a time and materials addendum for unforeseen site work

daily time logs and material receipts are attached to the contract
digital change-order workflow captures client approvals

Ensures materials are reimbursed promptly, contractor liabilities are limited, and project managers maintain a verifiable cost history for dispute resolution.

Best practices for accurate and secure time and materials contracts

Adopt consistent document structure, clear approval logic, and secure handling to reduce disputes and support enforceability.

Define billing rates and change-order procedures clearly

Include explicit hourly rates, material markup policies, thresholds for written change orders, and approval routing so both parties understand how adjustments are authorized and billed.

Attach time logs and receipts to signed documents

Require contemporaneous timesheets and material receipts as attachments to the contract or subsequent invoices to provide objective support for charges and reduce reconciliation time.

Choose appropriate signer authentication

Select email verification for routine agreements and stronger methods like SMS OTP or identity verification for higher-risk engagements or when additional evidentiary weight is needed.

Maintain retention and version controls

Store executed contracts and related change orders with immutable timestamps, version history, and backup copies to support audits and potential disputes.

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FAQs about signing time and materials contracts

Answers to common questions about electronic execution, authentication, compliance, and common errors when handling time and materials agreements.

Is an electronic signature legally valid for these contracts
Electronic signatures are legally valid in the United States when they meet ESIGN and UETA standards. Ensure signer consent, an intent to sign, and a reliable record-keeping method. Maintain logs showing the signing process, authentication methods used, and the final signed document to support enforceability in billing disputes or courts.
What authentication level is appropriate
For routine engagements, email-based authentication is usually sufficient; for higher-value or higher-risk agreements, require multi-factor authentication such as SMS OTP or identity verification to strengthen evidentiary weight and reduce fraud risk.
How do I handle change orders after signing
Use a documented addendum or digital change-order workflow that references the original agreement, records the change, secures required approvals electronically, and archives both documents together to maintain a clear audit trail for invoicing and dispute resolution.
How long should I retain signed contracts
Retention depends on regulatory and business needs; many organizations keep signed contracts and related billing records for at least seven years. Align retention with accounting practices, contract statutes of limitation, and any industry-specific rules such as HIPAA or tax requirements.
What should I do if a signer cannot access the platform
Provide alternative signing methods that still meet authentication and record requirements, such as sending a link for email signing or enabling in-person signing options, and log the alternative process in the audit trail with a clear explanation.
How can I ensure invoices match signed hours
Require contemporaneous timesheets and material receipts attached to the contract or invoice, use structured fields for hours and rates in the signed document, and reconcile electronically with accounting systems to reduce errors and speed approvals.

Comparing eSignature capabilities for time and materials contracts

This concise comparison highlights essential capabilities that affect how vendors support execution, authentication, and integration for time and materials agreements.

Capability	signNow (Featured)	DocuSign	Adobe Sign
eSignature legality
Bulk Send
API availability
HIPAA support	Available	Available	Available

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Key legal and operational risks to mitigate

Unenforceable signature: Improper consent

Billing disputes: Ambiguous rates

Privacy breach: Exposed PII

Noncompliance: Missing ESIGN/UETA steps

Record loss: Insufficient backups

Unauthorized changes: Lack of version control

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Improve sophisticated signing procedures with airSlate SignNowï¿½s powerful tools to boost your operation. Take control of your automated signature workflows to guarantee they're running at peak efficiency with instant notices and alerts.

Optimize in team communication

Join teammates together in a safe, shared environment. Manage documents, use form templates and notifications to produce more effective cross-company communication. Relieve your staff from having to spend time on repeating activities to enable them to concentrate on beneficial, business-crucial tasks.

Integrate into your existing systems

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Remain compliant with market-leading data protection

Feel safe understanding that your data remains secure by the most recent in encryption security. airSlate SignNow is GDPR and eIDAS compliant and gives you visibility into your signing procedure with court-admissible audit trails. Configure user access permissions and roles to control who has access to what.

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