Local usage may vary slightly but around here it is the maximum that the client will pay in any circumstance.
Lets say that you have an upset limit of $10,000.
You do the work on hourly rates and the total comes in at $8,000. You bill and are paid $8,000.
Now lets say that the hourly rates come in at $12,000. You bill and are paid $10,000, the upset limit.
Be clear if the limit includes disbursements or not. I have seen this as point of argument between consultants and clients.
Personally I do not like them. It puts almost all the risk at the consultant’s part with little or no risk to the client. (I have also seen these used in cost plus construction contracting, which is little different than time plus disbursements for a consultant.)
Instead of negotiating an upset limit why not call it a firm fixed price for the limit? That way if you can do the work for less you gain, if more you lose. At least then there is some potential reward for the risk.
Rick Kitson MBA P.Eng
Construction Project Management
From conception to completion
Any engineer or consultant can expect some changes in design or specification parameters, but sometimes one more change in the project causes one to smash his/her computer, throw his/her chair and take the rest of the day off. This person has reached his/her "UPSET LIMIT".
