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Imagine you are a consulting company and you have T&M contract based project. You aligned with the customer to provide consultants to work on a 4days/week schedule. The project is facing an issue on the customer side and work is blocked. your consultants were planned to this project and to any other. Days are going one after another... the issue still blocks the progress, you did all, reschedule other activities but cannot find anything more to do and all stuck.

Questions:

  1. Should the customer pay for such empty days / availability of the consultants? and why?
  2. What to do if the customer decline to pay explaining that becaus of the issue no work could be done, noting was delivered (T&M contract)?
  3. Would you prepare anything upfront in the contract for such a scenario?
  4. This is a typical risk in all project - how would you approach it from risk management perspective?

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This is only properly answerable in the context of any contract that exists between the parties. Without a contract that specifies what happens in the event of holdups caused by either side, you are into a negotiation with no strong basis for charging for the dead time. The customer holds all the cards, I would suggest, and can tell you to only charge for the time worked.

You should be able to charge for the other work that you say has been done to prepare for other activities - after all, that is legitimate work that would have to be done at some stage. But if you have now reached a point where you simply can't work, then I can's see how you can charge for that on a T&M basis with no contractual obligations on the client.

If your team can be redeployed onto other work for other clients, you should keep your client informed of your plans. You may find that this miraculously unblocks the issue, and at the very least it informs you client that he doesn't have exclusive access to the team unless he is prepared to pay for them.

From a risk management perspective, it should appear on the risk register for you - i.e. that you may be unable to deply your team and therefore can't be paid for them sitting idle, with a possible mitigation being that they will be deployed elsewhere or that the customer is prepared to pay to keep them on a retainer basis. It should also be flagged up to the customer as a risk for him, that he will either incur costs for doing nothing or lose access to the team in the event that he can't keep them occupied through his activity or inactivity.

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    +1 for "You may find that this miraculously unblocks the issue...". Indeed, when people find out they need to pay or incur additional delays, it usually mobilizes them to get whatever thing is stuck, unstuck.
    – Bogdan
    Dec 17, 2023 at 16:02
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If you are already in this situation, then the terms of the contract should specify what happens in this situation. As the existing answer mentions though, if nothing was agreed, then the customer is at an advantage and can refuse to pay for any idle time. Leaving aside the reason, if everything is stuck and you cannot work, why would they pay?

So at this point the resolution will depend on the willingness of both parties to work together to find a solution. A solution that is hopefully fair for both parties.

If this is a hypothetical question and you are asking for future contracts, then yes, these things need to be captured in the contract. You might be a provider of some services and be payed for those services, but it’s not as simple as that. Context matters. So a contract needs to put forth obligations for both parties in the event certain situation occurs.

Just like you might include clauses for force majeure, or regarding additional costs like software licenses or special hardware required to perform the work, you also need to include clauses about billing for idle time and specify under what conditions that should happen. A T&M contract is not an on/off switch. It’s not a work for 2 days. Stop. Work for 4 hours. Stop. Work for another 7 hours. Stop. Then draw a line and pay just for that. If the client would pay for time to use a machine, then that’s fine, but for staff workers it doesn’t work like that. Like I said, context matters. And in the case of a project, context switching matters. It takes time to become productive when you move from one project to another, or return to a project.

So in the eventuality of blockages or delays from the customer there needs to be a waiting period before you of-board your people from the project. And the customer should pay for this idle time. Once that threshold has been passed and you have moved the people to another project, there also needs to be a lead time agreed to staff the project back. Again, it’s not an on/off sort of thing. How long these periods of time should be depends on a case by case basis and on the willingness of both parties to negotiate the terms of the agreements.

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