T&M fits work where the scope cannot be fully known up front: new products, MVPs, integrations with poorly documented systems, or anything that will change after users see it. Instead of renegotiating the contract every time a requirement changes, the team re-plans the backlog and keeps working.
Because cost is open-ended, T&M needs transparency to work. Good practice includes a budget cap or monthly estimate, timesheets tied to tasks, regular demos of working software and the right to reprioritise or stop at any point. Without those controls, T&M can drift; with them, it usually wastes less than a fixed price padded for risk.
Pay for actual effort
Billing follows hours worked at agreed rates per role.
Flexible scope
Requirements can change without a contract amendment.
Client carries budget risk
The final cost depends on how much work is actually done.
Needs visibility
Caps, timesheets and frequent demos keep spending under control.
Codazz builds this in production — Software Outsourcing.