Time & Material

Time & Material is the default engagement model for staffing agencies and most freelance contracts. You pay an hourly or daily rate; the vendor logs hours; the bill arrives monthly. There is no contractual deliverable, only contractual effort. In Austrian and German law this maps to a Dienstvertrag: the vendor owes effort and diligence, not a finished work product. That legal distinction is the whole game, and it is why a Statement of Work (a Werkvertrag) is a fundamentally different instrument, not just a different invoicing style.

The model is honest in the sense that nobody pretends the vendor owns the outcome. It is also the worst-aligned of the common engagement models: the vendor’s incentive is to bill more hours, not to finish faster. Smart customers cap T&M engagements with a budget ceiling and a clear scope, which is essentially reinventing a fixed-price engagement without the legal teeth.

Worked example of how T&M goes wrong: a founder signs a “T&M to keep things flexible” contract for a feature everyone already agreed on. Three months and 40k later it is 70% done, the agency proposes another six weeks, and the founder has no contractual lever to pull because they never named a deliverable. Had the same work been scoped as a Werkvertrag, the 70%-done problem would have been the vendor’s to solve at the vendor’s cost.

Wavect uses T&M for exploratory engagements where the scope genuinely cannot be defined upfront. We do not use it as a default. The honest trade-off is real: T&M is genuinely the right model for open-ended research or unpredictable maintenance, where forcing a fixed scope would just make us pad the estimate or argue about “done”. The rule of thumb: use T&M when nobody can yet describe the deliverable, and switch to a retainer or an SoW the moment they can. If a vendor pushes you toward T&M for work that has a clear deliverable, they are pushing the risk onto you.