Construction Design Fee Standard Abolished 20 Years Ago Still in Use, People's Congress Representative Submits Suggestions for Six Consecutive Years

A standard that has been abolished for over 20 years is still regarded as a reference for fees in the industry today. Feng Yuan, a member of the National People’s Congress and chief engineer of China Southwest Architectural Design and Research Institute Co., Ltd., submitted a proposal during this year’s National Two Sessions titled “Suggestions on Ensuring Reasonable Fees for Architectural Project Design,” calling for strengthened guidance on government-invested architectural project design service charges, improved rationalization of fee rates, enhanced supervision of bidding platforms, and stabilization of the construction talent workforce.

“This is the sixth year I have submitted suggestions on this matter,” Feng Yuan told Yicai.

Beyond the construction sector, several industry insiders in urban planning also indicated that project fees in planning still reference standards from over twenty years ago. Unlike urban development phases, the concepts, content, and standards of urban renewal planning have undergone significant changes, and some new service contents and technologies may face issues such as “lack of fee basis” or “inability to charge premium prices.”

Are standards from 20 years ago still used as industry fee references?

In 2015, the National Development and Reform Commission (NDRC) issued the “Notice on Further Relaxing the Prices of Professional Services for Construction Projects,” which clarified that, based on the deregulation of prices for non-government investment and non-government entrusted construction project professional services, five categories of prices—including pre-construction consulting fees and engineering survey and design fees—were fully liberalized and now subject to market regulation.

The following year, the NDRC issued the “Decision on Abolishing Certain Regulations and Normative Documents,” which officially repealed the “Supplementary Notice on the Management of Engineering Survey and Design Fees” issued by the General Office of the National Planning Commission and the General Office of the Ministry of Construction in 2002.

As a result, design fee standards transitioned from government-guided prices to market-based pricing.

However, Feng Yuan’s research found that, due to audit reasons in engineering construction, a significant proportion of government-invested architectural projects still refer to the 2002 standards, with some even applying discounts of 20%-50%. This has led to long-term undercharging for design services, with fees decreasing over recent years, causing issues such as mismatched content and fees, vicious price competition, and industry talent loss due to lagging compensation.

“The fee dilemma faced by architects also troubles professionals in planning,” Feng Yuan added.

“Whether in construction design or planning, the fee standards for government-invested projects and government-commissioned services still largely reference standards from twenty years ago,” Xu Gang, deputy chief planner and director of the General Office of Beijing Tsinghua Tongheng Urban Planning & Design Institute, told Yicai.

A senior engineer specializing in urban safety and disaster prevention further explained that the current seismic and disaster prevention planning fee standards still refer to the “Guidelines for Urban Planning Design Fees” issued by the China Urban Planning Association in 2004. Although these guidelines are non-mandatory reference standards, they are highly influential within the industry.

Today, the planning professional believes that these fee standards are clearly outdated. Urban planning typically bases fees on population or area, with adjustments for specialized services such as fire protection, seismic resistance, and civil defense—fire protection might be multiplied by 1.0, seismic by 0.8, for example. In practice, seismic work is often more complex and resource-intensive than fire protection. Additionally, different cities have varying seismic fortification levels, building types, and quantities, all affecting work complexity, but these factors are often not reflected in pricing.

Xu Gang pointed out that the reason the construction and planning industries still reference standards from decades ago and rely on them as key references for government project fees is partly because the National Development and Reform Commission has issued relevant documents deregulating service prices, preventing government intervention in market prices, and thus standard updates or new price standards cannot be issued. Moreover, due to fiscal reviews and audits, government procurement still requires clear, universal, and authoritative fee categories. On the other hand, recent fiscal pressures on local governments, declining real estate markets, and reluctance of clients to pay higher fees have led service providers to adopt a “price reduction” strategy, intensifying price competition amid a saturated market and supply-side “involution.”

Meanwhile, Xu noted that as the market shifts toward more renovation projects and fewer new constructions, and as a significant share of the market is occupied by government or state-owned enterprise-funded renovation projects, market influence is substantial. In this context, some market-oriented projects are also affected by the fee standards set by these older benchmarks, and procurement for market-based projects cannot be detached from overall market conditions, further weakening the bargaining power of design and planning units.

Advocating for high-quality, fair pricing

At last year’s National Two Sessions, Feng Yuan made similar calls, proposing the establishment of reasonable fee standards for architectural design.

“After proposing this, relevant departments responded positively and communicated with me specifically, but no new standards have been issued yet,” Feng Yuan said in a recent media interview. According to previous responses from relevant authorities, after market-oriented reforms, the government cannot intervene in market prices, and the abolished standards cannot be reinstated.

To further address the issue of maliciously low prices in the industry, Feng Yuan also called for the development of guiding opinions and detailed fee rules for government-invested architectural projects. These guidelines should clearly specify minimum fee standards to prevent design quality from being compromised by excessively low fees.

However, Du Guangpu, senior partner at Beijing Weibo Law Firm and a long-time observer of competition and antitrust issues, offered a legal perspective in an interview with Yicai. He stated that price competition is one of the most important forms of market competition. For fields where market regulation prices are applied, restrictions on price competition—including setting minimum prices—whether initiated by enterprises, industry associations, or imposed by government, could potentially violate the “red line” of the Anti-Monopoly Law.

Du also pointed out that, according to the “Announcement on Regulating Unordered Price Competition and Maintaining Good Market Price Order” jointly issued by the NDRC and the State Administration for Market Regulation in September 2025, in industries with prominent issues of unordered price competition, industry associations and related organizations can, under guidance from authorities, investigate and evaluate industry average costs to provide a reference for reasonable pricing.

Xu Gang believes that standards and technological requirements in the architectural design and planning markets are constantly evolving and are heavily influenced by macroeconomic conditions and the real estate sector. In this environment, the market should be allowed to freely set prices through full competition, with improved government procurement rules, reform of fee calculation methods, and industry regulation guiding companies to adjust their pricing strategies and prevent vicious competition.

He noted that the downward trend in construction design and planning fees is not solely due to the “standards remaining unchanged for twenty years.” It is also because, after price liberalization, government procurement has yet to implement a system that favors companies with superior service and technical capabilities, and price competition still dominates. Additionally, some enterprises engaging in destructive market behaviors remain insufficiently regulated.

In essence, promoting fair market competition also requires strengthening oversight of the “buyer’s market.”

“Recommend that the Ministry of Housing and Urban-Rural Development lead efforts to strengthen supervision of industry companies and bidding platforms, and impose strict penalties on behaviors such as malicious low-price bidding and market disruption that violate design fee guidance,” Feng Yuan suggested.

Du Guangpu also mentioned that behind abnormal low prices are often other illegal issues involving laws such as the Anti-Monopoly Law, Price Law, Anti-Unfair Competition Law, Bidding Law, Product Quality Law, and the Fair Competition Review Regulations. Therefore, mechanisms for complaint reporting and enforcement should be improved to protect fair competition and prevent “bad money driving out good.”

Regarding how to improve government bidding rules, Xu Gang recommended that “they should not simply follow commodity procurement pricing models but should ensure that all bidders cannot submit maliciously low or abnormally high bids, while giving greater weight to innovation, technology services, and potential overall benefits in evaluation.”