time and lime

A time and lime contract is a shipbuilding agreement where the builder charges the owner for labour hours worked plus the cost of materials consumed, with profit typically added as a percentage markup. Unlike fixed-price contracts, the final cost is not predetermined; instead, invoices accumulate as work progresses. The term originated in British and European shipyards, where time referred to wages and labour, and lime was shorthand for limes, caustics, and other consumable materials used in hull construction and finishing.

This arrangement suited complex or experimental vessels where the scope of work could not be accurately estimated beforehand. Naval warships, research vessels, and heavily modified commercial hulls were common candidates. The shipbuilder kept detailed records of hours, crew rates, material requisitions, and supplier invoices; the owner received copies and retained the right to audit. Profit was typically calculated as a percentage of total cost, or occasionally as a fixed sum negotiated at contract signing.

Risk and accountability

Time and lime contracts shifted financial risk to the owner rather than the builder. If a vessel ran into unforeseen structural problems, design changes, or labour bottlenecks, costs rose and the owner paid the difference. Conversely, if work proceeded efficiently, the owner benefited from lower-than-anticipated labour spend. This made the contract attractive to builders undertaking uncertain work, but owners had to monitor progress and spending carefully to avoid escalation.

The arrangement required a high degree of transparency and trust. Disputes often arose over what constituted billable time, whether certain materials should be charged at supplier list price or net cost, and how overhead was allocated. Larger yards employed timesheet clerks and material accountants to document everything. The contract typically included clauses specifying which employee categories were chargeable, hourly rates by trade or grade, and allowances for non-productive time such as tool setup or rework.

Time and lime contracts became less common in modern shipbuilding as yards developed better cost-estimation methods and as fixed-price contracts became standard for commercial vessels. The term is now largely historical, encountered in older ship documents and maritime law texts. Contemporary variants exist in repair work and specialist naval construction, where cost-plus arrangements still make sense when exact scope cannot be known in advance.