The fixed fee arrangement is one in which the municipality specifies the task in terms of design and materials and the contractors bid for, or agree, a total amount to be paid. A fixed fee gives the municipality some certainty on price and gives the private firm incentives to be efficient. If the task is poorly defined or the sub-tasks unknown, many firms will be unable to estimate costs accurately and may not wish to enter into the arrangement; those with less capacity will enter into the arrangement and will make a loss or aim to restore profits through extras.