Analysis of incentive mechanism considering upper limit in design fee of Chinese construction projects

In the construction projects in China, the design fee is fixed and the designer´s positivity is restricted by this mechanism. Many scholars proposed that incentive mechanism should been introduced into bargain. That is to say, designer can get some percent profit according to their contribution. But in fact this kind of mechanism maybe causes such problem as designer take a risk in the hope of speculation. For example, designer may lower technical standards to gain a lower cost. Of cause these kinds of behavior harm the interests of owners. So In this article, an upper limit mechanism is added into bargain in order to avoid designer´s speculation. The principal-agent model is used in this article to calculate the upper limit accuratly. Then, some factors affect upper limit are discussed. Last, the new mechanism proved to be effective by the comparison between the model with upper limit and model without upper limit.