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One of us does not understand your contract. On a time and materials project, you pay the contract all of his costs for labor (time) and materials, plus profit. You have stated that in this case the profit is 10 percent. The contractor is obligated under this form of contract to furnish you with full details about how much he (the contractor) paid for his labor and his materials, and you are obligated to pay him that amount plus 10 percent (his profit). You do not directly pay his labor or his material cost. He tells you up front what his laborers are going to cost you per hour. If you think his rate is too high, you get another bid. If you are concerned that the cost may exceed what you are willing to pay, you may want to consider a lump sum contract, or a cost plus fixed fee with a not to exceed limit.