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A common contract type for service-oriented clients is time and materials (TM). In this arrangement, supplies and services are acquired based on direct labor-hours at loaded labor rates. Loaded labor rates consist of the basic wage plus additional percentages to cover indirect costs, such as overhead. For example, if an employee earns $10 per hour, the loaded rate would be higher to account for these extra costs. In TM contracts, materials are reimbursed at cost, and sometimes you can negotiate to include General and Administrative (G&A) expenses. While the TNM rates for labor are fixed, the number of hours worked can vary.
