T&M Billing for Subcontractors
Time and material (T&M) billing charges for actual labor hours, materials, and equipment used on a job, at agreed rates, instead of a fixed contract price. A defensible T&M rate sheet builds in labor burden, equipment cost, and markup up front, so every T&M ticket is profitable instead of just busy.
Most subcontractors underprice T&M work because their labor rate is built off gross wage, not fully-burdened cost. Payroll taxes, workers' comp, benefits, and small tools all belong in the rate before markup gets added, or every T&M hour bills at a loss disguised as a win.
What Belongs in a T&M Rate
| Component | What It Covers |
|---|---|
| Base Wage | The hourly wage paid to the field employee |
| Payroll Burden | Payroll taxes, workers' comp, unemployment insurance |
| Benefits Load | Health insurance, retirement match, PTO accrual where applicable |
| Small Tools & Consumables | Wear items and small tools not billed as separate line items |
| Markup | Overhead recovery and profit added on top of the fully-burdened rate |
Materials and equipment get their own markup lines, separate from labor. Equipment should bill at a cost-per-hour rate that reflects ownership cost, not just fuel and operator, or every T&M job quietly subsidizes the equipment fleet.
What Erodes T&M Margin
Rate Built on Base Wage
Quoting the T&M labor rate off gross wage instead of fully-burdened cost bakes in a loss before markup is even applied.
No Daily Ticket Discipline
T&M tickets signed days later from memory instead of same-day miss hours, materials, and equipment usage.
Undocumented Equipment Time
Equipment sitting on a T&M job without a logged cost-per-hour rate bills at zero.
Stale Rate Sheets
A rate sheet built two years ago doesn't reflect current wage or material cost, and every job under it underbills.
No GC Sign-Off Cadence
Waiting until the end of the job to get T&M tickets signed invites disputes over hours nobody can verify.
T&M billing charges for actual labor hours, materials, and equipment used, at agreed rates, instead of one fixed contract price. It's typically used for change order work, emergency work, or scope that can't be estimated accurately up front.
Base wage, payroll burden, benefits load, small tools and consumables, and markup for overhead recovery and profit. A rate built on base wage alone underbills the actual cost of the labor.
At a cost-per-hour rate that reflects true ownership cost, depreciation, maintenance, and financing, not just fuel and operator time. Equipment sitting on site without a logged rate bills at zero.
Usually because tickets aren't signed same-day. Waiting to submit hours days or weeks later invites the GC to question quantities nobody can verify. Same-day sign-off is the single biggest protection against a T&M dispute.