Structure/budget of freelance job

I'm wondering if anyone here who works as an independent freelancer can give me some insight into how they usually structure projects. I currently work with a few full-time people--we are all self-taught and do Drupal as only part of our jobs. We're applying for a grant that would involve building a new site, and we could hire an outside person to work on it as a consultant/contractor.

For jobs like this, do people prefer to charge a flat fee or get paid by the hour? What kind of hourly rate is typical for development work? (We can probably do the design in-house.) Any advice on how I can realistically determine the number of hours the project would take?

Some background:

First, we'd need someone who could set up a special kind of workflow system. A user would upload a file and set up questions that other people would answer (could include free text, Likert scale, etc.). Then they could invite specific other users to view the file/answer the questions, either by name or by characteristics in the user profile. At some point in the process, the file would be pushed to storage on a different system. This process might happen iteratively, with the user uploading different versions of the file to get feedback. So in addition to the workflow aspect of this, there would need to be some mechanism for inviting other users to do something, as well as user profile customization to gather the info that users would filter on to select invitees. One of our staff is experienced with the backend storage system, but we'd need to work with someone who could learn enough about it to make the integration part of whatever modules they're building or adapting.

Second, we'd need someone to lead usability testing--not necessarily the same person who is working on the first part.

FYI, I'm posting this in the NYC group specifically because I know lots of things cost more here than they would elsewhere. Also, I'm sorry to say, please don't contact me about applying for this job right now; even if we do get this grant, the project wouldn't start for months.