In order to facilitate the variables involved in project management, a variety of contractual arrangements have been developed that have been designed to meet the needs of the parties involved. The time and material (T&M) contract is one such instrument that provides an alternative to standard, boilerplate contracts.
In a time & material (T&M) contract, both parties agree to unit rates that have been predetermined by both parties in advance for the category of senior engineers. This is also the case in fixed-price arrangements. In project management, this type of contractual arrangement contains aspects of both cost-reimbursable and fixed-price contracts, and could be considered a hybrid of the two. Like a cost-reimbursable arrangement, the time & material (T&M) contract has no definite end. The full value of the contract is not defined at the time the contract is awarded. Therefore, similar to cost-reimbursement contract, time and material (T&M) contract can grow in value over the period they are in effect. The inherent flexibility of the time and material (T&M) contract makes it an attractive alternative for those involved in project management, as well as for the individuals involved.
This term is defined in the 3rd and the 4th edition of the PMBOK.