Time and materials
Pennsylvania caps a time-and-materials home improvement job at 10% over the written estimate unless the owner signs a change order
On a Pennsylvania time-and-materials home improvement job, the bill can run at most 10% over the written estimate without a signed change order.
- Written initial cost estimate
- $20,000
- 10% allowed over the estimate
- $2,000
- Ceiling the contract states in dollars
- $22,000
Without a change order, week 6 billing on the example job passes the $22,000 ceiling by $2,500
A Pennsylvania home improvement contractor can bill a residential job on time and materials, but the bill cannot run more than 10% above the written estimate unless the owner signs a change order. Act 160 of 2014 added that rule to the Home Improvement Consumer Protection Act, the state law that governs contracts for work on houses, and it took effect when the governor signed it on October 22, 2014. Before any work starts, the contractor has to hand the owner a written initial cost estimate, and the contract has to state the ceiling in dollars. On a $20,000 bathroom estimate, that ceiling is $22,000.
The 2014 amendment added time and materials beside the fixed price
The 2014 amendment added a definition to Section 2 of the act. A time-and-materials job is one where the owner pays the actual cost of labor at a specified hourly rate, the actual cost of materials and equipment, and an agreed percentage of those costs or a fixed amount for the contractor's fee and overhead.
Before 2014, Section 7(a)(8) required every home improvement contract to include the total sales price. The amendment kept that requirement and added a second path. A contract can now include a time-and-materials provision in place of a fixed price, as long as it carries the disclosures below. The Attorney General's FAQ says the amendment was what allowed contractors to offer time-and-materials contracts to Pennsylvania owners.
The contract has to state the ceiling twice, as a 10% limit and as a dollar total
| Section of the act | Requirement |
|---|---|
| 7(a)(8)(i) | A written initial cost estimate given to the owner before any work starts |
| 7(a)(8)(ii)(A) | The dollar value of the initial cost estimate |
| 7(a)(8)(ii)(B) | A statement that the cost may not exceed the estimate by more than 10% |
| 7(a)(8)(ii)(C) | The total potential cost (the estimate plus 10%) in actual dollars |
| 7(a)(8)(ii)(D) | A statement that the cost will not rise above the estimate plus 10% without a written change order signed by the owner and the contractor |
| 7(a)(1) and 6 | Your PA registration number |
Clause (C) asks for more than a percentage. The contract has to state the total potential cost, meaning the estimate plus 10%, in actual dollars.
The example estimate comes to $20,000, so the contract states $22,000
The graphics below follow a made-up bathroom remodel billed on time and materials, in round numbers. All figures are examples only.
The contractor estimates 120 hours of labor at $80 an hour, $5,600 in materials and $800 in equipment rental, for $16,000 in cost. The fee is 25% of actual cost, or $4,000, so the initial cost estimate is $20,000. The contract states that the cost may not exceed that by more than 10%, and it gives the total potential cost as $22,000.
Labor rose from $9,600 to $12,000, and the total from $20,000 to $24,500
In the third week, the crew pulls the tub and finds the subfloor rotted at the tub wall, with two joists that need sistering. The contractor prices the repair at 24 more hours of labor and $880 in materials, plus the 25% fee, for $3,500. The owner and the contractor both sign a change order before the crew starts the repair.
The subfloor and joist repair adds $3,500, and $1,920 of it is labor
The act does not say whether a change order brings its own 10% allowance. In this example, the change order states the new ceiling in dollars, $25,500, which is the original $22,000 plus the $3,500 repair. The job finishes at $24,500, or $1,000 under that ceiling.
With the change order the ceiling is $25,500, and the job finishes $1,000 under it
Without the signed change order, the ceiling stays at $22,000.
The contractor would have done $24,500 of work against a contract that allows $22,000, and the $2,500 difference would be outside what the contract lets it bill. The week-by-week billing shows when the job would have crossed that line.
Billing reached $21,500 by the end of week 5, within $500 of the original ceiling
| Week | Billed to date | Billed $22,000 $25,500 | Ceiling without a change order | Ceiling with the change order |
|---|---|---|---|---|
| Week 1 | $4,000 | $22,000 | $22,000 | |
| Week 2 | $8,500 | $22,000 | $22,000 | |
| Week 3 | $13,000 | $22,000 | $25,500 | |
| Week 4 | $17,500 | $22,000 | $25,500 | |
| Week 5 | $21,500 | $22,000 | $25,500 | |
| Week 6 | $24,500 | $22,000 | $25,500 |
By the end of week 5, billing reaches $21,500, within $500 of the original ceiling. A contractor who compares billing with the stated total each week can write a change order before the crew passes it.
Two other change-order rules apply to every home improvement contract
The time-and-materials rule sits beside two other change-order requirements that apply to every home improvement contract.
Section 7(a)(7)
Section 7(a)(7) requires the contract to describe the work and the materials and to include specifications that cannot be changed without a written change order signed by the owner and the contractor.
Section 9(6)
Section 9(6) bars deviating from the plans or specifications in any material respect without a written change order, dated and signed by both, that states the price change for each deviation.
On a time-and-materials job, the subfloor repair in the example is a change to the specifications and also a cost above the ceiling. A single change order can address both if it describes the work, gives its price and states the revised ceiling in dollars.
The deposit limit in Section 9(10) also applies to contracts over $5,000. It is written in terms of the contract price, and the act does not say which figure stands for the price on a time-and-materials job. Ask your attorney which figure to use before you set a deposit. The rules on deposits and special-order materials are covered in Pennsylvania's one-third deposit cap.
What to check before you sign
- Pull your standard time-and-materials contract and look for the four statements in clause (ii) of Section 7(a)(8).
- Make sure the total potential cost is printed as a dollar amount, and that the estimate went to the owner in writing before the first day on site.
- Keep a change order form that lists the work, the hours, the materials, the fee and the revised ceiling in dollars, with lines for both signatures and the date.
- Track billing to date against the stated ceiling every week. When the remaining room drops below what the next week of work will cost, stop and write the change order then.
For the registration number every contract needs, and the $50,000 insurance minimums the act sets, see how Pennsylvania's home improvement contractor registration works.
Caveats
This is general information about the statute, not legal advice for a particular contract. The Attorney General's FAQ describes itself as an incomplete explanation of the law and not a legal opinion. Court decisions applying the time-and-materials provision were not reviewed for this article.
The act applies to home improvements at a private residence, which it defines as a single-family house, a building of no more than two units, or one unit in a larger building such as a condominium. New home construction is outside it, and so is commercial work. A job of $500 or less is outside the definition of a home improvement.
Under Section 7(a), a contract that leaves out a required term is not valid or enforceable against the owner. Section 7(g) lets a contractor that complied with Section 7(a) recover the reasonable value of work the owner requested, if a court decides it would be inequitable to deny payment. Section 10 makes any violation of the act a violation of the Unfair Trade Practices and Consumer Protection Law as well.
The statute, the 2014 amendment and the Attorney General's FAQ were checked on November 7, 2026.