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, mobilization and fuel at set rates. Agreed up front, so you bill it instead of proving it.
T&M work gets contested and paid slowly because the GC wants every cost proven after the fact. This page shows how to build a T&M rate sheet that gets attached to the contract and agreed up front, the five lines that make it defensible, and a calculator that builds the ticket the way a signed schedule does.
Get Paid For The Work, Not Forced To Prove It.
Time and materials billing charges the actual labor, equipment, and materials a job consumes, plus overhead and profit, instead of a fixed lump sum. It is used when scope is uncertain: emergency work, unknown conditions, change-driven work, and anything that cannot be cleanly estimated up front.
The problem most subcontractors hit on T&M is proof. The general contractor wants documentation for every hour, every gallon of fuel, and every piece of equipment before they pay. That back and forth is where T&M cash goes to die. The fix is not better record keeping after the fact. It is a rate schedule attached to the signed contract, so the rates are agreed before the work starts and you bill them instead of proving them.
Every line on a good T&M schedule is a number the GC already agreed to: labor at a published burdened rate, equipment at a set rate, fuel at a set burn rate, mobilization per machine. Once it is signed, you bill it. You do not reconstruct it. That is what gets you paid fast with little back and forth.
The Five Lines That Make It Defensible.
A T&M rate sheet that holds up is built from five lines, each one a number you can defend because it is published and agreed, not reconstructed from field notes.
| Line | How It Is Set |
|---|---|
| Labor | Each role's fully burdened rate plus 20 percent. Burdened means wage plus payroll taxes, workers comp, and benefits, not the base wage. |
| Supervision | 10 percent of all labor. Foreman and superintendent time is rarely tracked by task in the field, so it is added as a flat percent because it is required whether or not it is documented. |
| Equipment | Published at rental rate, set to the highest rate around. If availability forces you to rent, you are covered instead of eating the gap. Billed by day, week, or month. |
| Mobilization | A set dollar amount per machine, billed each time it moves. No one itemizes the haul, so the agreed number gets you paid for it. |
| Fuel | A set burn rate, gallons per hour off industry standard, times hours run, times fuel price. Nobody tracks actual fuel per task, so the agreed rate means you collect it without proving it. |
On equipment, the 13-month rule applies the same as any rental: four weeks is one month, so a five-week job bills one month and one week. Publish day, week, and month rates so the math is already agreed.
Overhead And Profit, Stacked On Top.
After the labor, equipment, mobilization, and fuel subtotal, two lines go on top. Overhead at 10 percent of the subtotal. Profit at 5 percent of that same pre-overhead subtotal. On a $10,000 subtotal that is $1,000 overhead and $500 profit, for an $11,500 bill.
That 5 percent is thinner than most subs would set if they had the leverage, and on T&M work the GC usually sets the terms. Which is the whole point of building the schedule right. You cannot fatten a contractually required margin, so the money is in collecting all of it, fast, without surrendering hours to a documentation fight. A clean agreed schedule turns a slow, contested T&M bill into one that gets paid on the normal cycle.
T&M Rate Calculator.
Enter the hours, equipment days, mobilization, and fuel for a ticket. The calculator builds the bill the way a signed rate sheet does, then stacks 10 percent overhead and 5 percent profit on the pre-overhead subtotal.
Build A T&M Ticket
Enter your numbers. The result updates as you type. Nothing is saved or sent.
Agreed, not proven. Every line here is a published rate the GC signed off on, so this bill goes out and gets paid without a documentation fight.
A planning estimate that mirrors a signed T&M rate schedule. Labor is entered already burdened and marked up 20 percent. Overhead is 10 percent of the pre-overhead subtotal and profit is 5 percent of that same subtotal, both stacked on top. Confirm percentages against your contract.
Set The Rate For The Whole Year.
The quiet killer on T&M work is a rate built on busy-month assumptions. When the schedule is full, the labor and equipment rates feel fine. Then the slow months come, overhead does not pause, and the rate that looked healthy in June does not cover the year.
A $2.4M fiber splicing contractor lived this. T&M work came in bursts, overhead ran straight through the gaps, and the rates were built on honest-feeling busy-month math instead of full-year utilization. One January alone ran $141K in project costs against $144K in revenue, almost nothing left before overhead. Once the numbers were visible monthly, the owner could see which months were structurally profitable and set a T&M rate that held up across the whole year, not just the busy stretch.
