Time
and material is a project billing type whereby the customer is charged for all
of the hours of work performed by the resource on the project or task, any
direct expenses incurred by the resource, and material or software purchased
for the project by the resource or team during project delivery. For example,
if the company hired a consultant to install a software in your office, the
consultant might opt to charge you for time spent on the installation of the
software (the number of hours) and materials purchased during the installation
of the software (the raw cost of the direct materials used during the
installation).
Time and material billing arrangements are typical in the construction industry, contractors, consulting firms, and accounting particularly when the full scope of the project is not well understood and also when there might be chances of many changes taking place in between project delivery. For most consulting arrangements, a customer and a service provider typically start working together on a time and material basis when the requirements are not clear. Once the project is scoped and well defined, the project may be billed using milestone billing or some other form of fixed billing.
The seller or the outsourcing company simply allocates a committed number of hours for the project and the rates are also pre-decided between vendor and Outsourcing Company. Whether the hours are utilized completely or partially is not your responsibility. It’s for this reason, you are allowed to interview the people allocated to you, so that you can insure the people hired can perform the task as accepted.
The assumptions made here are while agreeing to time and material are:
Time and material billing arrangements are typical in the construction industry, contractors, consulting firms, and accounting particularly when the full scope of the project is not well understood and also when there might be chances of many changes taking place in between project delivery. For most consulting arrangements, a customer and a service provider typically start working together on a time and material basis when the requirements are not clear. Once the project is scoped and well defined, the project may be billed using milestone billing or some other form of fixed billing.
The seller or the outsourcing company simply allocates a committed number of hours for the project and the rates are also pre-decided between vendor and Outsourcing Company. Whether the hours are utilized completely or partially is not your responsibility. It’s for this reason, you are allowed to interview the people allocated to you, so that you can insure the people hired can perform the task as accepted.
The assumptions made here are while agreeing to time and material are:
- You should know what exactly to do and how much time should be spent
- You know in what order to accomplish things and how to achieve it with the right resources
- You can evaluate and decide who should be allocated for you to get the work done so that there is no delay in the delivery dates
About Author:
Shailesh Nambiar is consultant and part of Systems Plus Pvt. Ltd. He actively contributes to information technology and VMO. He can be contacted at: shailesh.n@spluspl.com
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