Most construction agreements are based on a fixed-price model and while this does offer significant advantages, a lot of people also prefer using a time and material contract. This type of contract is predominant for projects where the timelines and scope of work are not easy to establish. A time and material contract is beneficial in certain cases if you want to minimize your costs and ensure that anything you need to pay for are all covered for by the work actually rendered by your contractors. Here are some examples of instances when you may want to use a time and material contract.
First, a time and material contract is advisable if the projects involves unpredictable scenarios or costs. Remember than in a traditional fixed-price contract, all the parties are able to agree on the requirements of the project, the deadlines, and the precise specifications of the final product. However, if a client would like more room to change certain aspects of the project, a time and material contract can be advantageous. It is also useful when the timelines are unpredictable, especially when the client is expecting that there would be changes in deadlines along the way.
Second, when you are new to the industry, it can be difficult to come up with a fixed-price contract when you are not fully aware of the costs that determine that final price. For instance, there may be hidden expenses and overhead costs that you may fail to account for in your quote to the client because of your lack of experience or former knowledge. In cases like these, and especially when you are just starting out your construction business, it may be more advantageous for you to go with a time and material contract for your projects to ensure that you will not pay out-of-pocket for unexpected expenses that suddenly crop up. Discover more about time and material contract on this site: Rhumbix.
Finally, if you are working on a long-term project that requires a lot of flexibility on both you and your client’s part, a time and material contract can be beneficial. With this type of contract, you can easily implement necessary changes and ensure that everything is as your clients wishes. However, an important thing to note is that many states actually prohibit the use of time and material contracts. Always make sure that you are legally able to use this kind of contract before using one. For more information about time and material contract, clcik on this link: https://www.encyclopedia.com/education/business-degrees-and-programs/project-management.
We just sent you an email. Please click the link in the email to confirm your subscription!
OKSubscriptions powered by Strikingly