The project is quite a bit over-due and over-budget (the original estimate was 1 year and $1.2 million)
It seems a bit backwards to how I would have expected a contractor to be remunerated.
1. I give you a project brief
2. You give me a quote
3. We agree on a price
4. I pay a portion upfront
5a. You deliver it on time
5b. You deliver it late
6. I pay you the remainder on delivery.
In either scenario they get paid the same - for doing the work that was agreed. Giving someone such a lucrative incentive
It is the classic question on how to bill - time & material or fixed price.
In the list above, if your project brief changes even a little bit, you will have to figure out a way to incorporate it into your contract price (if you go in for a fixed price contract). I am sure the requirements have evolved as the project has progressed.