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In this tutorial, Matt, a contracting officer, explains time and materials contracts, commonly used in construction and product development. These contracts allow payment for the time and materials utilized in a project, particularly when estimating project size or potential changes is challenging. This contrasts with fixed price contracts. According to federal acquisition regulation subpart 16.6, time and materials contracts involve acquiring supplies or services based on direct labor hours at specified fixed hourly rates, incorporating wages, overhead, administrative expenses, and profit, as well as the actual costs of materials. They are best used when project scope is uncertain.