Business Debt Workouts: There Should Be a Law Against Time and Materials Contracts

I can't believe it happened to me again. I know better, unfortunately my wife does not. I never ever allow a contractor to work on my projects for time and materials. Not to say they are screwing me, or purposely over billing me. In fact it is entirely possible I am getting value for my money but it is not the way to do business. In this instance she was having two porches rebuilt, the verbal estimate was for $6000. The conclusion was over $15,000 for time and materials. Yes a good job was done, but I had no intention of spending that much but I got the bill after the fact.... too late.

The only way is with written estimates with time and price with defined objectives and specific deliverables. Additionally, there should be an agreement about the markup of materials. Further, it always helps to get at least one other bid, not necessarily looking for the lowest but at least keeping the bids in the right ballpark.

With time and materials, there is no incentive to work efficiently, quickly or at all. The pace is best held to slow as the more you work the more you get paid.

It is open ended, in search of perfection...on it goes, never ending, the continuous bill, an annuity.

Besides, the customer never has an opportunity to decide what he wants to pay and what he wants to get for it. He only gets ongoing bills and wonders when it will end and when he will get what he wants.

A professional can bid effectively, accurately and fairly, for both the customer and the professional. The professional is entitled to a fair profit and the customer is entitled to know what it will cost and how long it will take and what will be accomplished. How can time and materials billing possibly satisfy that goal?

If the consumer market will not accept time and materials, the professionals will not continue to bill this way. Insist on a well specified bid offer well-documented with time, cost and results. This works.

Conclusion, forget the time and materials deal...it never works out for the customer.