The separation of individual components of a contract (a combined contract) from each other for the purpose of treating each component as a standalone contract. This aims at reflecting the substance of the transaction(s) involved rather than their legal/ contractual form. This process depends on whether the contract was negotiated independently or as part of a package (which is, however, legally segregated into several contracts). Unbundling (segregation) is meant to isolate the cost/ revenue relating to each component in order to better account for individual results/ performance of such components.

For example, when a contract involves construction of several assets, the construction of each asset is considered a separate process in cases where the costs/ revenues of each asset can be clearly identified, or where each asset has a separate proposal or is subject to its own round of negotiations.