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Three Best Practices for Managing a Time & Materials Contract

Posted on
November 1, 2022
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Let's get back to basics! Based on our research, we learned that T&M projects that include freelance team members consistently encounter challenges starting with onboarding and continuing through delivery. So, a refresher on when to use T & M, its benefits, and some best practices might help everyone.

  

What is a T&M Contract and its benefits?  

A time & materials contract is a flexible agreement that bills the client for the hours it takes to deliver a project instead of the amount of work done. The contract typically describes the scope of the job and quotes for a fixed hourly rate plus the cost of materials. Benefits include flexibility, the ability to move faster without specifying scope upfront, and teams can easily adjust to changes. 

When is it best to use a T&M contract? 

  • If the scope of the project is not well defined
  • If the requirements of the project frequently change
  • If the project is a long duration  

Using a time and materials contract allows clients to be more flexible when working with freelance talent and get projects to the finish line with greater speed. However, T&M contracts aren't without their challenges. If they are not properly managed and agreements aren't clear, things can go south. We wanted to outline the top three best practices to help clients and talent get the most out of T&M projects.

  

Best Practice 1: It's All in the Details - A Thorough Onboarding  

Thorough onboarding is essential to ensure the success of all parties. This all starts with a detailed contract. With a lot of legal jargon and terms in contracts, ensure all parties clearly understand:

  • Rate: the final agreed-upon hourly rate paid to the contractor
  • Maximum hours: this guards against runaway costs  
  • Budget for out-of-pocket costs: If there are any expected costs, clarify what they are upfront
  • Payment terms: when the contractor can expect to be paid and how

Having a project brief helps outline goals and expectations for the timing and output of the project. Along with the brief, it is also necessary to include ways of working in the conversation, addressing how communication will occur and any processes or tools used. If there are any internal processes or tools, include training during the onboarding process. This gets talent set up for success and ready to add value. 

Another key detail to proper onboarding is providing background documentation early and taking the time to brief talent on project content. Clients can set up a shared folder for talent to quickly access documents and schedule a kickoff meeting to cover all the project details.  

While these steps may seem tedious, they are necessary to align expectations and avoid miscommunication throughout the project. 

 

Best Practice 2: Stay on Track! 

Wripple's recent research reported that when clients hired freelancers for T&M projects, challenges were most often related to delivery issues such as time management, clarity of needs, and timely communication. The following suggestions can help avoid pitfalls.

Time and materials record-keeping is critical to ensure talent and client are aligned on the work performed for a project. It is best to create a system that can record details of the job and how long it took to complete each task. Making it a regular cadence to review will ensure the project is on track to meet goals. 

Online templates or project management tools such as Asana or Monday.com are great for maintaining project alignment. By clearly laying out a visual work plan, expectations are set, and project changes can be viewed.  

Here is an example of a layout done on Monday.com. Talent can view the project details and keep a record of their time. Many clients also include a backlog of work in their shared project management tool, so freelancers have continuous insight into what work is coming.  

Source: https://support.monday.com/hc/en-us/articles/360001143809-The-Time-Tracking-Column- 

Best Practice 3: Stay Engaged 

The key to a successful T&M contract is open communication. View your T&M contractor as a partner in the project, and as appropriate, get them involved in regular status meetings and discussions! For better collaboration, be intentional throughout the process and tackle issues or challenges together.

Lastly, create a transparent system where talent has a direct line to someone on the team to help them address issues or risks with the project. This ensures that problems are tackled early and won't cause issues down the line. Let a new freelance team member know to who they can raise issues, so they feel comfortable sharing concerns and following proper internal escalation paths.

We hope this refresher will be helpful in best practices when a T&M contract is used. If you have any further questions or would like help on how to get a T&M contractor on your team, contact ClientTeam@wripple.com