Optimizing T&M Agreements
The following methodology outlines how to optimize the framework for procuring consulting services on a “Time and Materials” basis.
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Challenges with Time and Materials (T&M) agreements often arise when the scope of external resources expands from a small, project-specific team to a large, diverse pool of resources distributed across multiple projects.
A comprehensive overview of the company’s external resource usage minimizes the risk of overlooking significant price discrepancies across different resource types. It is common to find that a specific resource is billed at one rate in one agreement, while an entirely different hourly rate is charged for the same resource type in another.
This article examines the economic factors influencing the procurement of consulting services on a Time & Materials (T&M) basis, as well as how customers can manage these purchases using a standardized framework for setting hourly rates. It reviews methods for mapping and harmonizing rate cards, resource composition, and key contract terms.