I need a some suggestion here.

What you describe is commonly done across many industries.

Accounts are created for hours dedicated to a specific customer, or project. Employees charge their time against individual accounts. Hours not directly chargeable to a customer account (billable hours) are charged to accounts for overhead which may be split into multiple categories like group meetings, training, and general office tasks like 5S of your workspace.

There are many time-tracking software tools available for this but it does require management and finance buy-in to start and maintain. There is a cost associated with it. For each new project, an administrative role must create the new account and distribute the charging information. Miss-charging can be a problem and expensive to fix.

There is an obvious trade off there between how much fidelity you want in your spending information, vs. how much it costs to manage the various charging accounts.

Totally agree with @Keith above. In fact, to put this in terms of "standards" which most of the companies are using you can take a look to TBM (Technology Business Management). I do not like this type of monitoring and control, but is something I am implementing and using from long time ago because the places where I worked strategy.

This is 'fixed-price' work but on the task level.

Its called piece-work. If you want to know how it works go to your local car repair garage. The big question is - who takes the risk and, in reverse who gets the benefit - the employee or the company. If the employee gets paid for actual time then there is no employee risk - all benefit. One could argue that there is reduced motivation to "get on with the assignment". If the employee is put on piece-work then there is motivation to complete the assignment quicker which could result in quality issues.

Suggest you undertake a risk management perspective on this - identify the risks, develop mitigating measures and monitor.

Hello Dhvani

Since this involves salary/contractual fees which is very sensitive, you have to be very cautious in dealing with it. Run it as pilot in a small group/project over a period of time you will gather lessons/challenges, ways of working, accordingly tweak your policy/contract and roll it to a larger group.

The tradeoff could be, how much you will have to go through/invest time and effort & processes on such initiatives, to save cost on the project.

If the objective of your initiative is reduce cost, consider grade mix, time sharing, outsourcing non core activities, or outsource those niche deliverables for which you would have hired which adds to your cost with no future projects you could outsource those deliverables, bill pm efforts. Reduced software licenses and introduce working in shifts to optimize software licenses.

Do considered the following:

Are the estimation correct w.r.t. the task/activity. What if the developer says it takes longer time.

You are looking at hours put in the project, but does those hours actually reflect productivity/output. Who will be evaluating the work/output - (i suppose it will be PM) will have to validate the
work/productivity/output and approve all the time, which will be paid. What if the output/productivity is NOT of acceptable quality - will you still pay the salary/fees.

For someone who could not complete the task in the given time, maybe faced with challenges/hurdles, who will be evaluating those aspect/clearing those hurdles. (1) A person will lose his money, just because there challenges held up his part of the work and (2) it can cascade/delay other aspects of the project.

Hope it helps.