"Going over budget? That's fine, let's renegotiate. Remember though that you're already behind on this project so that needs to be taken into account. We'd prefer this last leg of the project to be flat rate..."
It's definitely not right - and as a contractor your should read the tarot cards and have had preparations in place so it wouldn't happen - but you'd be amazed at how often variations of this scheme work out with PMs and procurement at larger companies that should really know better.
