Time-Based Contract

A time-based contract remunerates consultants and service providers for the actual number of days or hours worked by named or described staff at agreed billing rates, plus reimbursable out-of-pocket expenses, rather than fixing a single total price for the entire assignment.

What is a Time-Based Contract?

Under a time-based contract, the buyer and supplier agree on unit rates for each category of staff (for example, a senior engineer at a daily rate, a junior analyst at a lower rate) and on which expenses are reimbursable (flights, accommodation, subsistence) at cost or with a cap. The total contract value is an estimate, not a ceiling: the buyer pays for actual time recorded, subject to any agreed maximum expenditure limit built in as a budget control.

Development banks and UN agencies use time-based contracts for assignments where the scope is difficult to define precisely before work starts, such as policy advisory work, complex diagnostic studies, and implementation support that adapts to evolving circumstances. They contrast with lump-sum-contract arrangements, where a fixed price covers a fully specified scope. The tor for a time-based assignment describes the expected outputs and the estimated inputs (person-months), which form the basis for the budget estimate that frames the solicitation.

The standard World Bank and UN model contracts for consulting services both include time-based variants with defined payment, reporting, and audit provisions.

Why Time-Based Contracts matter for bidders

Winning a time-based assignment still requires a competitive technical proposal under methods such as qcbs, but the financial risk profile is fundamentally different from lump sum work. Because payment tracks actual time, the contractor's exposure to scope uncertainty is reduced, though buyers often set a maximum expenditure limit that cannot be exceeded without a formal amendment. Accurate time-recording systems matter: invoices must be backed by timesheets cross-referenced to deliverables. Suppliers should also read the reimbursable-expense schedule carefully, since different buyers define reimbursable costs differently, and uncovered costs erode margin.

FAQ

Is there a budget ceiling in a time-based contract?

Most time-based contracts include an estimated maximum expenditure that the consultant must not exceed without the client's prior written approval, functioning as a soft ceiling on the buyer's liability.

How does payment work under a time-based contract?

Invoices are submitted periodically (monthly or at agreed milestones) showing the actual days or hours worked by each staff category at the contracted rate, plus supporting receipts for reimbursable expenses.

When does a development bank use a time-based instead of a lump sum contract?

When the precise scope, duration, or staffing mix of an assignment cannot be fully determined in advance, such as ongoing advisory support or complex technical assistance, a time-based contract is preferred.