T&M LOOKS EASY UNTIL THE APPROVAL CYCLE BREAKS.
T&M work, meaning the change orders, the troubleshooting, and the service calls, reads as your highest margin revenue. The margin leaks out in four places: tickets that go unsigned for weeks, an approval cycle that stretches payment to 60 to 75 days, lump sum conversions that settle for less than the tickets were worth, and a rate sheet nobody has reviewed in 18 months. A journeyman billed at $95 an hour was built to carry 18 percent margin. Cost creep takes that to 8 percent or lower.
The trouble with T&M is that nothing about it fails loudly. Base contract work has a schedule of values, a pay app date, and a retainage line, so somebody watches it. T&M has a ticket book in a truck. A ticket written on Tuesday and signed three weeks later, if it gets signed at all, still cost you the same wage on Friday. By the time the write-off happens the job is closed and the crew has moved on, so nobody ties the lost margin back to the ticket that was never signed.
WHAT IT MEANS.
T&M billing is charging a general contractor for extra work at published hourly labor rates plus material and equipment at cost or an agreed markup, rather than at a fixed price, and it only pays when the ticket is signed.
The reason to run T&M at all is that it should collect faster than base contract work. There's no schedule of values to argue about, no percent complete to prove, and no retainage in most contracts. When T&M gets bundled into the monthly pay app, all three of those advantages go away and you're financing extra work at your line of credit rate for two and a half months.
FOUR PLACES THE MARGIN LEAKS.
Unsigned tickets stacking up
A ticket written mid-week may not get signed for weeks. By then the superintendent who watched the work has rotated to another project, the scope is being disputed, and the ticket gets written off. Written-off T&M isn't a discount. It's the entire margin plus the wage you already paid, on work your crew already performed.
The approval cycle stretches the wait for cash
T&M bundled into the monthly pay app collects in 60 to 75 days like every other line on that application. The whole argument for T&M is that it pays faster than base contract work. Bundled, it pays no faster, so the extra work sits on your line of credit for two and a half months while the labor was paid on Friday.
Lump sum conversions on unfavorable terms
Near the end of a project the GC asks to roll six months of accumulated tickets into one change order. Converted in a lump, the total almost always comes in under what the individual tickets were worth, because unsigned work gets discounted and undocumented hours get dropped. The conversion isn't the problem. Negotiating it without the arithmetic is.
Rate erosion on an unreviewed rate sheet
A rate sheet nobody has touched in 18 months is billing last year's labor cost at this year's wages. A journeyman at $95 an hour covering $42 of direct labor, $17 of burden, $19 of overhead, and $17 of profit was designed for 18 percent margin. Wage and comp increases take that to 8 percent or lower without a single approval changing.
WHAT IT LOOKS LIKE IN DOLLARS.
$95 an hour of journeyman billing covers $42 of direct labor cost, $17 of burden, $19 of overhead, and $17 of profit. That's 18 percent margin in every billable hour, by design. The design only holds while the four inputs under it are current.
A $4M electrical subcontractor running 18 percent of revenue through T&M is putting $720K through the ticket book. A 6 point margin leak on that's roughly $43K a year, which is about half of what one journeyman costs you fully loaded. Nobody sees it, because it never posts as a loss on any single job.
WHAT WE CHANGE.
The ticket gets signed the day the work is done, by the GC's designated approver. Unsigned tickets don't bill, so an unsigned ticket is an open item a foreman chases before the crew leaves the site. This is an operating policy rather than a preference, and it's the single highest-return habit in T&M work.
T&M gets invoiced weekly or every two weeks, separate from the monthly pay application. The contract language to ask for is plain: T&M and additional services may be invoiced on a weekly basis separately from the monthly pay application schedule. Ask for it at contract signing, because asking mid-project reads as a cash problem.
Pull current wage rates, burden, and overhead, then recalculate the bill rate each labor class needs to hold its target margin. Update the sheet formally, date it, and notify your GCs at the start of the next project or at renewal. A rate sheet with no date on it's a rate sheet nobody will honor an increase on.
When the GC asks to convert, the price is the sum of the approved tickets plus a defensible value for performed work that never got signed. Bring the arithmetic to that meeting. A conversion negotiated off a total you can support settles higher than one negotiated off a feeling, every time.
T&M revenue and T&M direct labor get isolated as their own category in the job cost structure. That lets realized margin on T&M be read against the target margin the rate sheet was built for, so a structural leak becomes visible inside a month instead of at close-out. You can't fix a leak that's blended into base contract margin.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing, no payroll, and no add-ons.
| Last 12 months revenue | Monthly fee |
|---|---|
| Up to $1M | $1,900 to $2,900 |
| $1M to $3.5M | $2,600 to $3,900 |
| $3.5M to $6.5M | $3,800 to $5,700 |
| $6.5M to $9.5M | $5,100 to $7,100 |
| $9.5M to $12.5M | $6,100 to $8,500 |
| $12.5M to $15.5M | $7,400 to $11,000 |
| $15.5M to $18.5M | $9,400 to $13,500 |
| $18.5M+ | Quoted individually |
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions rather than a report.
Your bookkeeper keeps doing the books.
You stop touching the books.
Everything in Core, and we run the bookkeeping and the controllership as well. Nobody in your office is answering coding questions or chasing a reconciliation at month end.
We do the books. No payroll.
Every job shows its margin while it's still running.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the job costing.
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