Professional services · T&M vs fixed-price vs milestones

Time-and-materials = over-time / fixed-fee custom = criterion (c) / milestone-based = output method

Status

SPEC ONLY

Why this pattern exists

Consulting engagements vary widely. Recognition method depends on contract structure and whether the work creates a distinct customer asset.

03 / 07When this applies

1Consulting / SI engagement

2T&M, fixed-fee, milestone, or hybrid pricing

3Custom development vs commodity service

04 / 07Authority

Every codification reference below is verified against the FASB Codification structure or Big-4 public guidance. No fabricated cites.

ASC ASC 606-10-25-27

Three over-time criteria

ASC ASC 606-10-25-31

Measure of progress

ASC ASC 606-10-55-21

Cost-to-cost mechanics

05 / 07What the platform does

1T&M: over-time, criterion (a), input method (hours)
2Fixed-price custom: over-time if criterion (c) met (no alternative use + right to payment)
3Milestone-based: output method if substantive milestones
4Pass-through expenses: principal-vs-agent test for gross vs net

06 / 07Watchouts

Common mistakes preparers make on this pattern. The platform's confidence routing surfaces these for reviewer ratification before sign-off.

Defaulting to point-in-time for fixed-price (often over-time)

Using cost-to-cost when output (deliverables) is more faithful