what is the difference between a time and material contract and a cost plus contract?

Answer 1

Time & Material (T&M) fixes a rate for labor and material expenditures, the key here is pre-agreed upon rates.

Cost Plus gives the owner labor at the prevailing wage rate for each craft and materials at actual cost, then adds an agreed upon mark-up on both, usually as a percentage (cost plus 10%)

One other variation would be cost plus fixed fee, where the owner would get labor and materials at cost, plus an agreed upon fee to cover overhead, profit, etc.

Answer 2

Time and Material:
In a level-of-effort contract, the contractor promises to devote labor and/or materials to a specific task up to an agreed-upon ceiling amount. The contractor is not required to complete any particular task, but instead is paid according to the amount of labor time (or cost of materials) actually used, up to the ceiling amount.

Cost Plus:
In a cost-reimbursement contract, the customer pays the contractor's incurred costs of performance and usually pays an additional fee as well. The contractor promises, in turn, by way of a written cost estimate, to use its best efforts to perform its obligations under the contract before beginning work.

.

Answer 3

Come on ***** - time and material contract covers all the time spent on the job and all of the material purchased. A cost plus contract allows the other party to throw in all kinds of charges. your best bet is to get a written proposal for a flat rate. the job should take this long with this much in material and your rate is this. and never pay the full proposal until you have inspected all of the work.