Time and materials?

[PCustoms]

Hypothetical situation.

Scope of project is clearly defined and has a finite amount of work involved for the contractor. Bulk of materials are already purchased, contractor would supply mics. conduit and supplies.

What would be the benefit to requesting a time and materials quote vs. a normal install price?

 

[jd_1138]

Not much benefit. Probably not much difference in price between whether you or him supplied the materials. As he'd probably get a discount on the materials, and probably marks them up as part of his profit margin. But if he's not supplying all the materials, he can just raise the price of his labor to offset it.

Usually, if I hire someone to do a job, I let them pick out their materials. They might be leery of using materials/brands/suppliers that they didn't pick out or usually work with.

 

[TommyK]

The benefit of a fixed quote based on a defined scope is cost certainty. The risk of a time and materials arrangement is cost uncertainty unless it is on a not to exceed basis.

 

[PCustoms]

materials would be purchased through same distributor at same price, we determine the specification in the design phase.

Saw an odd request go to one of my contractors today and can't wrap my head around why we would want T&M on a project with a finite start and stop, for example, replace 20 worn out widgets with new widgets I have on the shelf. Some generic widget screws may be required.

 

[alien]

When someone bids a job they add in a little time to cover unexpected costs (additional labor). Hourly work (unless they are milking it(going extra slow)) you pay for what you get! I am an electrician and I tell my customers I will work either way whichever is more comfortable for them. If I think a job will take 40 hours I will bid it at 50. I work efficiently and you actually get a better deal hourly (time/material) with me. But that is me and not everyone.

 

[Speedy Petey]

T&M is fairer and safer for both parties, if both are trustworthy.
A contractor will typically make more on a contract for reasons mentioned, but if the job is at all questionable it is more risky for him as well.

 

[WhiffySpark]

I don't do time and materials because people can't seem to understand I won't work for free and value my time. I do a lump sum price.

I generally dont work with provided materials either, just my way.

 

[wyliesdiesels]

T&M is fairer and safer for both parties, if both are trustworthy.
A contractor will typically make more on a contract for reasons mentioned, but if the job is at all questionable it is more risky for him as well.

I don't do time and materials because people can't seem to understand I won't work for free and value my time. I do a lump sum price.

I generally dont work with provided materials either, just my way.

I avoid having the customer buy materials because 9 times out of 10 they get the wrong stuff and end up wasting your time.

 

[LXCam]

You can request a T&M with a not to exceed price. I've had a couple of major projects where the customer provided certain packages (lighting, switchgear, generators, UPS systems bla-bla-bla). The downside is the contractor doesn't make his cut, the upside is he also doesn't have to warranty the product either. It can be a double edged sword for either party.

On a resi job you might end up spending more if your create a problem where the contractor has standby charges when you don't have sufficient material on site to keep him rolling or as Wylie pointed out the wrong material. Also who completes the take off, you?. Do you know how to compensate for a waste factor and other variables.

My suggestion is let the contractor cover and warranty all costs, its cheaper in the long run.

 

[Speedy Petey]

You can request a T&M with a not to exceed price.

What is your justification for this???

If the job has ANY unknowns at all how in the world is that fair to the contractor? If something comes up, or there is a situation no one could predict, you expect someone to work for free?? F-THAT!

If you need a NTE clause then hire someone you trust!

 

[aptdweller]

I don't know about where you are, but with the projects I deal with T&M is a code word for you are about to get screwed by the contactor. Generally you have less say on their material costs and almost none on the hours they work.

I find it isn't much of a problem when it amounts to a few % of the contract price. Either way, giving a blank cheque to a contractor has never struck me as a very smart thing to do.

 

[Tucko]

materials would be purchased through same distributor at same price, we determine the specification in the design phase.

Saw an odd request go to one of my contractors today and can't wrap my head around why we would want T&M on a project with a finite start and stop, for example, replace 20 worn out widgets with new widgets I have on the shelf. Some generic widget screws may be required.

T&M is pretty much just a guarantee that the contractor won't lose any $ on the job. If he gives a fixed price, he has to eat any cost overruns, etc. My company loves getting T&M work, because no matter how long it takes, we get paid for it.

 

[LXCam]

What is your justification for this???

If the job has ANY unknowns at all how in the world is that fair to the contractor? If something comes up, or there is a situation no one could predict, you expect someone to work for free?? F-THAT!

If you need a NTE clause then hire someone you trust!

It's pretty common practice. More or less the contractor sets a firm price no different then he would normally bid it at but completes the job on a T&M basis. If that comes in lower then the customer wins and if not that's the price. I was a commercial/industrial electrical contractor for 22 years so I've been down this road a few times. Personally I prefer a hard bid but have done my share of negotiated contract work. After closing my construction business I now sit on the other side of the table and represent the owner or as a design consultant. It's a much better gig.

 

[Wirepuller]

It's pretty common practice. More or less the contractor sets a firm price no different then he would normally bid it at but completes the job on a T&M basis. If that comes in lower then the customer wins and if not that's the price. I was a commercial/industrial electrical contractor for 22 years so I've been down this road a few times. Personally I prefer a hard bid but have done my share of negotiated contract work. After closing my construction business I now sit on the other side of the table and represent the owner or as a design consultant. It's a much better gig.

So the customer wins if he's completed the contract sooner that anticipated and he wins how?


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[LXCam]

So the customer wins if he's completed the contract sooner that anticipated and he wins how?


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Seriously? The cost will be lower then the estimate or not to exceed price.

 

[checkthisout]

Better to get a fixed price bid. If I was a contractor I wouldn't do it any other way.

Protects the customer from slow workers and rewards a good contractor who has invested time and skills in doing jobs efficiently.

 

[Dirtydan69]

I rarely do T&M anymore. It's funny though. People will complain about my hourly rate ($89) but will pay twice that to do a job that may take an hour. Every once in a while they will say something like well it only took you 30 minutes or whatever time it took. My response is would you pay me more if it took longer? People are just generally cheap. It seems like more so here in AZ then when I was in IL. I've dealt with more cheapskates, grumbles and complainers here in the short time I've been here than in my entire time in IL.

 

[LXCam]

I rarely do T&M anymore. It's funny though. People will complain about my hourly rate ($89) but will pay twice that to do a job that may take an hour. Every once in a while they will say something like well it only took you 30 minutes or whatever time it took. My response is would you pay me more if it took longer? People are just generally cheap. It seems like more so here in AZ then when I was in IL. I've dealt with more cheapskates, grumbles and complainers here in the short time I've been here than in my entire time in IL.

This reminds me of something that happened over 30 years ago after I had been in the trade for a couple of years. I worked for a small time resi commercial guy. I got sent out to do a service call at this guys house. I replaced a light switch, wrote up the work order and handed him a invoice within 15 minutes of getting there. Of course we had a minimum service charge (at that time it was $35.00 plus like a one dollar switch..hahaha). Anyhow the guys says well you only worked five minutes and I explained the minimum charge. So he says ok so I'm paying you for a one hour charge no matter what eh?. I spent the remainder of my hour changing our a few switches and receptacles. Flipping cracked me up.

 

[Wirepuller]

Seriously? The cost will be lower then the estimate or not to exceed price.

Exactly. For the sake of simplicity; Mr. Plumber could have fixed firm bid a job for 10 hrs, Or work T+M with a not to exceed 12 hrs and he gets it done in 8. The customer wins because Mr. Plumber charged for 8 hrs. How does getting it done sooner and more efficiently benefit Mr. Plumber.


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[Dirtydan69]

This reminds me of something that happened over 30 years ago after I had been in the trade for a couple of years. I worked for a small time resi commercial guy. I got sent out to do a service call at this guys house. I replaced a light switch, wrote up the work order and handed him a invoice within 15 minutes of getting there. Of course we had a minimum service charge (at that time it was $35.00 plus like a one dollar switch..hahaha). Anyhow the guys says well you only worked five minutes and I explained the minimum charge. So he says ok so I'm paying you for a one hour charge no matter what eh?. I spent the remainder of my hour changing our a few switches and receptacles. Flipping cracked me up.

I did Living Social and Groupon coupons when they first came out. Two hours of service for cost of one hour. I sent one of my guys out on this service call and he changed a 220 dryer outlet. Customer supplied. He was done in 35 minutes. The customer then said since he had purchased two hours he had some other things to do. My tech hung some pictures and adjusted a door. Still had an hour left and the customer wanted him to do his dishes. My tech refused and the customer didn't push it.

 

[LXCam]

Exactly. For the sake of simplicity; Mr. Plumber could have fixed firm bid a job for 10 hrs, Or work T+M with a not to exceed 12 hrs and he gets it done in 8. The customer wins because Mr. Plumber charged for 8 hrs. How does getting it done sooner and more efficiently benefit Mr. Plumber.


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I never said it benefited the contractor. Are you going to keep this up all day?

Ya know what I'm going to modify my answer about how the contractor benefits or lack there of monetarily if he completes the job in less hours. The contractor builds a level of trust with the customer. Obviously that is extremely important in a service related field, not so much in hard bid construction.

 

[Hilltopmasonry]

For me, a time and material job works well if there is a lot of unknowns involved with the project. For example let's say there's a demolition project and I'm not sure what's behind the walls or how difficult the walls will be to remove. I have run into masonry walls that are literally like blowing down concrete...a real pain in the ***. So when I go to bid a job i usually bid it assuming a worst case scenario. However the job might go extremely well therefore I make good money on it.

or let's say the project is extremely complicated and will require a lot of change orders sometimes you're better off doing a time and material job. The only bad thing about a T and M job is a lot of times contractors who don't know what they're doing will push for a time and material job because they really don't know how to bid the job. Then the contractor comes in there with a bunch of employees that don't know what they're doing and really **** the homeowner


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[Bert_]

If I bid a job 9.9 times out of 10 it will be more expensive for the customer than to do the same work for time+materials. Like everyone else has said a bid price will be for the worst case scenario. If I had a T&M job and ran into complications that added considerable expense I would make sure the customer understood what happened and maybe even cut them a little break if their a good customer.

Bottom line, Find a local, reputable contractor and let him do his job.

 

[Gotcha640]

On the industrial side, owner prefers lump sum when the scope is clearly defined (almost always, with all the engineers we have hanging around).

Our embedded contractor only does t&m, since they're available at the last minute to do undefined work and have a significant amount of rework (scope or spec changes or job gets canceled after they've started). They submit time sheets and receipts and get reimbursed at the agreed rates. Over the past 12 years, they average 99.8% of their estimates, so the client keeps them around. They know the site well enough they're always between 97 and 103%.

Contractors on lump sum will have someone dedicated to tracking every last minute of delay, and make sure they work to the letter of the contract, so they can be reimbursed for anything extra. I've done that job, and it can be contentious.

Contractors can

 

[matt_i]

My experience is that the main job (defined in scope of work) is bid on a fixed price system. Any change orders that come up to modify the scope of work, are usually added on time + material, especially when there is not time to bid out another scope of work. As stated above, managing the contract from either side is not for the faint of heart, usually some good negotiating skills can get thru the roughest parts.

I can see and understand reasons for both types of contract, going past electrical work to generic jobs. Sometimes a customer wants something semi-outlandish done and neither party has an idea what kind of can of worms is about to be opened. Always insist on time + material.

If its a person/company you have worked with before and know they will be reasonable, then time + material could be appropriate. However the "not to exceed" maximum is always a good idea otherwise its a blank check...