Time and Material Model: How and Why You Can Benefit With It?

Igor Zats
Igor Zats
Technical Writer

Need a web project, but don’t know exactly how to execute it? You need at least a basic understanding of the development process and what features are included.  In some cases, a fixed priced contract may be a good choice, but it depends on how detailed the specifics of your project are. If you have an idea and don't want to spend your time and money on documentation to get your first fixed price quote, the best solution for you is the Time and Material approach.

Why’s that? Well, when it comes to software development, you can rarely see the whole plan – every potential functionality and feature of your application – beforehand. With the Time and Material approach, the client can control each stage of development because he views his project step by step.


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     time and material

    It doesn’t matter if you spent a ton of time on your Request For Proposal (RFP), because you may not be able to include each piece of necessary information. Most of the time, when we receive an RFP, we have to ask a lot of follow-up questions. The list of these questions can be even longer than the whole RFP.

    Our company is constantly at work on billing strategies, and after years of experience and experiments we’ve ascertained that the time and material contract basis is the most ethical and flexible. Following the time and material approach, we can accurately assign payment for the vast majority of projects. Unlike with a fixed price basis, the client pays only for actual time spent on project development.

    But what we are talking about exactly?

    What is the Time and Material Model?

    Time and Material is a basic phrase in contracts for project development, in which the client agrees to pay the contractor based upon the time spent by the contractor's team. This type of contract is used when the contractor faces some issues with price estimation, or if the scope of the project may change in the future (often multiple times). The client is required, by the contract, to pay for the materials used, the cost of labor, and the work that is done eventually.  

    The client is charged for drawn up hours required for a project, including the cost of materials. Thus, the client can get a flexible contract with the opportunity to add new directions, requirements, add or replace new features, as well as bring in users to get a hold on the status of the product.

    When is it a good idea to use a Time and Material contract?

    • The scope is implicit or not known;

    • The project is long-term and includes dynamic requirements;

    • The client wants to have the opportunity to make changes in the scope and workload.

    How you can benefit from the Time and Material approach?

    With a Time and Material contract, the client receives the following advantages:

    1. Flexible development process. Businesses are able to modifythe dynamics of the work process, revise designs, and change or replace features in implementation.

    2. Dynamic work scope. This point may be essential when it comes to larger projects. The client wants to achieve a specific goal, and the full understanding of how it will be achieved is not so important. Some mid-sized companies or startups are looking for a way to make a decision during the process, to evolve or change the strategy, etc. That’s where Agile methodology comes into play.

    3. Good timingWhen a client chooses against a fixed-price bidding basis, this saves time and kickstarts the development process, because they receive minimal paperwork and get a Proof of Concept as fast as possible. Furthermore, with blended rates, a client can see how much time has been spent on a certain feature or task, so he will know how to motivate the team to work as efficiently as possible.

     Wrapping Up

    As you consider the aforementioned Time and Material model, it is important to weigh all the advantages and disadvantages of the approach and how it can fit your project. Facing some issues while making a decision on pricing models? Drop us a line, and we’ll be happy to provide brief recommendations on your project.

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