T&M BILLING IN CONSTRUCTION: HOW TO SET THE RATE.
Time and materials billing charges the actual labor, equipment, and materials a job consumes, plus overhead and profit, instead of a fixed lump sum. The key is a rate schedule attached to the signed contract: labor at burdened plus 20 percent, equipment at published rental rate, and mobilization and fuel at set rates. Agreed up front, so you bill it instead of proving it.
T&M looks like the safe way to work because every dollar of cost is billable in theory. In practice it's the slowest money on the job, because a GC who hasn't agreed to a rate in writing will argue about every line on the ticket. The paperwork fight is about what the hour was worth. Settle that at contract execution and a T&M ticket becomes a routine invoice. Leave it open and each one becomes a negotiation you run months after the crew went home.
WHAT IT MEANS.
Time and materials billing is a billing method that charges the actual labor, equipment, and materials a job consumes, plus overhead and profit, instead of a fixed lump sum.
T&M gets used when scope is uncertain: emergency work, unknown conditions, change driven work, and anything that can't be cleanly estimated up front. The method itself is sound, and the trouble is always proof.
The general contractor wants documentation for every hour, every gallon of fuel, and every piece of equipment before they pay. The fix is a rate schedule attached to the signed contract, so the rates are agreed before work starts and you bill them rather than proving them after the fact.
WHY T&M DOLLARS GO UNCOLLECTED.
The GC wants proof for every line, after the fact
Without a signed rate schedule, every T&M ticket becomes a documentation exercise. The GC asks for backup on every hour, every gallon of fuel, and every piece of equipment before they release payment. Rebuilding that record weeks later is slow and it gets contested line by line, so the money sits while somebody in the office digs through timecards for work everyone agrees was performed.
The costs nobody tracks by task never get billed
Supervision is rarely tracked against individual tasks, so it goes unbilled unless the contract carries it as a flat percentage of labor. Fuel has the same problem, because nobody records gallons burned per task on a T&M ticket. Both are real costs on every hour of work performed, and both stay on your side of the ledger without comment when the rate schedule doesn't carry a line for them.
The rate was built on a busy month
T&M work comes in bursts while overhead runs continuously through the slow stretches in between. Rates built on busy month assumptions cover overhead in the busy months and fall short across the year. A verified fiber client doing $2.4M ran one January with $141K in project costs against $144K in revenue, which is the arithmetic of a rate that only works when the phone is ringing.
WHAT IT LOOKS LIKE IN DOLLARS.
Labor, equipment, mobilization, and fuel add up to a subtotal, then overhead goes on at 10 percent of that subtotal and profit at 5 percent of the same pre-overhead subtotal. A $10,000 subtotal carries $1,000 of overhead and $500 of profit, so the bill is $11,500. Every line under it's a published rate the GC signed off on, which is what makes the total defensible instead of debatable.
On equipment, the 13-month rule applies the same way it does on any rental, so four weeks is one month. A five week job bills one month and one week rather than five separate weeks. That single convention is worth real money on longer T&M work, and it's standard enough that no GC argues with it when the rate schedule says so.
THE FIVE LINES THAT MAKE IT DEFENSIBLE.
Each role gets its own line at the fully burdened rate plus 20 percent, where burdened means the wage plus payroll taxes, workers comp, and benefits. Billing the wage instead of the burdened figure is how a T&M job runs at a loss while every ticket gets paid in full.
Supervision goes on as a flat 10 percent of all labor, because it's rarely tracked task by task and a flat percentage is what a GC will sign. Written into the rate schedule, it bills automatically on every ticket instead of getting dropped for lack of backup.
Publish each machine at the rental rate, set to the highest rate around, and bill it by the day, week, or month. Using the local rental market as the reference makes the number verifiable by anyone who wants to check it, which ends the argument before it starts.
Mobilization gets a set dollar figure per machine, billed on each move, with no itemization required. Moves are the cost most often absorbed on T&M work because they feel like part of doing business. A line on the rate sheet turns each one into an invoice.
Fuel bills as a set burn rate, meaning gallons per hour from the industry standard multiplied by hours run multiplied by the fuel price. Nobody tracks fuel per task, so a set burn rate is the only way this gets billed at all. Agreed in the contract, it needs no receipts.
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.
Pricing
| 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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