What is a Time and Material Tag?
A Time & Material Tag is an industry-standard document that contractors use to authorize and document the amount of work spent on a certain task, typically work completed outside the current contract scope. The most common example would be a Subcontractor who is directed by a General Contractor to perform additional work outside the regular contract. The subcontractor proceeds with the work and documents the labor, material and equipment spent, using a paper Time and & Material Tag (also known as a T&M Tag). The General Contractor’s superintendent signs the Tag verifying the quantities shown accurately reflect the description of the work. Unlike Change Order Requests, T&M Tags simply keep track of quantities, while leaving the price adjustments to the project management team.
It is typically the project manager’s job to oversee the project contract and associated costs. In most companies, the job site crew is not allowed to approve or submit costs in the field. That’s why they use a Time & Material Tag to document the quantity of work performed without any associated costs attached. The T&M Tag process is designed to help both parties:
- Subcontractors can protect themselves from performing uncompensated work outside their contract by formally documenting what their crew did.
- General Contractors use T&M tags to protect themselves from approving costs out on the jobsite that may wind up being work already included in the contract.
Why does my company call them something different?
We use the term Time and Material Tag because it is widely understood industry slang. But many companies have different names for these same documents. For example, we surveyed one General Contractor on a large construction project in San Jose, CA and here’s the list of different names for T&M Tags that were submitted by subcontractors:
- Extra work order
- Daily planning and report form
- Extra work authorization
- Daily rental or extra work report
- Service order
- Time and material tag
- Field work authorization
- Daily extra work report
- Day work report
- Work order
- Order for additional work
- Additional work authorization field report
- Time and materials extra work
- Change order request form
- Force account report
- Field work order
- Survey service record
Regardless of what your company calls these documents, the goal is always the same: to document out-of-contract work performed onsite.
Why are T&M Tags so important to keep construction projects moving?
Time & Material Tags are critical tools to keep projects moving forward. When it is unclear if work is in or out of contract, instead of arguing over it for days or weeks, the job site crew can proceed with the work. The crew simply documents the quantities of labor, material and equipment and the office decides if the work was truly in/out of contract. Additionally if work is agreed to be tracked on a T&M basis ahead of time, it saves the upfront administrative time - and associated delays - of creating a Change Order Request, reviewing it and issuing a Change Order before work can begin.
What situations require the use of a Time and Material Tag?
Not every Time and Material Tag tracks the same thing. They are as unique as each Construction Project, but some common uses would be:
- Overtime hours
- Paint touch-up
- Trade damage
- Additional cleaning
- Concrete sack and patching
- Drywall patching
- Owner/Architect-directed changes
- Unforeseen conditions
The above situations are routine changes to any construction contract, but there’s an industry tendency to dislike Time and Materials Tags.
Why do they seem to be hated documents?
The current Time and Material Tag process is painful for everyone and often feels like Subcontractors must submit Tags for nearly everything. The administrative burden of tracking Tags becomes a full-time job for the Subcontractor and General Contractor office staff. Each T&M Tag might represent just a few hundred dollars but they can quickly add up to 100s of thousands of dollars in costs.
What makes them so challenging
Even with Mobile Phones and Laptops in the field, Time and Materials Tags are still done primarily on triplicate carbon copy paper: One copy for the subcontractor, one copy for the General Contractor and one copy for the Jobsite.
Costs are applied to a Time & Material Tag in the form of an associated Change Order Request applying the project’s rates. Once the COR is created, it is emailed to the customer. Change Order Requests can sit awaiting approval from the Customer even though the work has already been done!
But this doesn’t even highlight some of the most time-losing pitfalls that can occur in the Time and Materials process:
- The documents are sloppily handwritten
- They can be hard to read
- Photo documentation rarely exists
- Paper copies must be physically driven from the field to the office
- Documents must be scanned in order to provide backup documentation
- They are often incredibly slow to process, resulting in backlogs and delays
- They get lost!
- Coffee gets spilled on them. A lot.
- They come back from the field looking more like beat-up, ancient artifacts than a clean, professional document.
Why they are important to Subcontractors
When a Subcontractor proceeds on T&M, they are already incurring the costs of paying their crew, installing material and more. In order to get their budget updated to cover the costs they incurred, they have to go through the manual process of converting the Tag to a COR and submitting for formal approval from the GC. If the Tag is delayed or not approved for one of the reasons listed above, the Subcontractor can wind up spending more than they are contracted for on the project. Even if they do get the T&M Tag and COR approved, they have to wait for the processing time, approval time and then the billing cycle in order to be reimbursed. While they are waiting, they are effectively financing this portion of the project.
Why they are important to General Contractors
For General Contractors, the same is true but in reverse. If the T&M Tags are legitimate, the GC’s goal is to cover the cost in their existing budget or get reimbursed by the project owner. But if the Tags are late or hard to understand, the General Contractor is in a tough position where they either need to fight the subcontractor over who will eat the cost or strain a relationship with the project owner trying to get the costs approved.
Why documentation is crucial for all parties
One of the biggest challenges with paper Time & Material Tags is that there is inevitably a delay in processing time. This means that Tags often do not get reviewed until weeks or months later. When Tags are submitted without a clear description, with poor handwriting or no photo documentation, it opens up questions to their legitimacy. Better documentation means faster approval for everyone.
When you use digital tools like Extracker, not only is the T&M Tag instantly shared with all parties but the documentation is clean, professional and can be easily backed up with photo documentation.
Why a consistent process is critical
Just like building muscle memory, consistently going through the same Time & Material Tag steps makes the process easier. It also makes life more efficient for your customers. If your first Tag on a project is processed and sent to the customer quickly, they will expect others to be done in a similar manner. If one is lingering for weeks or months, they will assume it doesn’t exist.
How Extracker helps maintain organized and professional Time & Materials Tags
With Extracker, we give you mobile tools to professionally document your work, making life easier for Subcontractors and General Contractors alike. From your mobile phone, you can quickly assemble a Time & Material Tag that efficiently documents every extra bit of work performed. At the press of a button, a clean PDF T&M Tag is created and instantly shared with the General Contractor. With our photo documentation tool, you can show the work completed with before-and-after pictures. Your work is documented in a way that gives the General Contractor the ability to clearly present any extra costs to the owner (or back charge another contractor if necessary).
Extracker instantly recognizes these cost exposures and neatly logs them for both the Subcontractor and the General Contractor, drastically reducing financial surprises. Any additional costs are transparent for all parties to access and review instantly.
Extracker: Fewer disputes, fewer headaches, fewer monetary bombshells.
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