FacilitiesKey performance indicators (KPI) for the sustainability of building energy efficiencyretrofit (BEER) in hotel buildings in ChinaPeng Peng Xu Edwin H.W. Chan Queena K. Qian

Article information:To cite this document:Peng Peng Xu Edwin H.W. Chan Queena K. Qian, (2012),"Key performance indicators (KPI) for thesustainability of building energy efficiency retrofit (BEER) in hotel buildings in China", Facilities, Vol. 30 Iss9/10 pp. 432 - 448Permanent link to this document:http://dx.doi.org/10.1108/02632771211235242

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Users who downloaded this article also downloaded:Djoko Setijono, Jens J. Dahlgaard, (2007),"Customer value as a key performance indicator (KPI) anda key improvement indicator (KII)", Measuring Business Excellence, Vol. 11 Iss 2 pp. 44-61 http://dx.doi.org/10.1108/13683040710752733Peter Jones, David Hillier, Daphne Comfort, (2014),"Sustainability in the global hotel industry", InternationalJournal of Contemporary Hospitality Management, Vol. 26 Iss 1 pp. 5-17 http://dx.doi.org/10.1108/IJCHM-10-2012-0180Chunguang Bai, Joseph Sarkis, (2014),"Determining and applying sustainable supplier key performanceindicators", Supply Chain Management: An International Journal, Vol. 19 Iss 3 pp. 275-291 http://dx.doi.org/10.1108/SCM-12-2013-0441

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Key performance indicators (KPI)for the sustainability of buildingenergy efficiency retrofit (BEER)

in hotel buildings in ChinaPeng Peng Xu, Edwin H.W. Chan and Queena K. Qian

Department of Building and Real Estate,The Hong Kong Polytechnic University, Kowloon, Hong Kong

Abstract

Purpose – Building energy efficiency retrofit (BEER) not only provides excellent opportunities toreduce overall energy consumption of buildings in a city but also encourages environmentalprotection, the rational use of resources, and occupants’ healthcare, which all contribute towards thesustainability of existing buildings. However, there is a lack of effective performance indicators tomeasure the sustainability of BEER projects. The aim of this paper is to formulate a list of keyperformance indicators (KPI) for the sustainability assessment of BEER in hotel buildings.

Design/methodology/approach – First, a literature review and in-depth interviews with industryexperts and academic researchers were conducted, which filtered the performance indicators forassessing sustainability. Second, a questionnaire survey was conducted to collect data from variousgroups of experts to analyze the significance of the selected performance indicators. Finally, a modelbased on fuzzy set theory was designed to identify the key performance indicators (KPIs) for thesustainability of BEER.

Findings – Eight KPIs were identified based on fuzzy set theory in this study. They are: qualityperformance, hotel energy management, cost performance, project profitability, energy consumptionand resources saving, health and safety, stakeholder satisfaction, and innovation and improvement.

Practical implications – The KPIs of sustainability of BEER identified for hotel buildings in Chinain this study can be useful reference for other similar research. However, with the differentrequirements for building types and building ownerships, the KPIs of sustainability of BEER fordifferent buildings may be variable. The findings in this study may not be directly relevant to othertypes of building.

Originality/value – Key performance indicators for the sustainability assessment of BEER in hotelbuildings in China are identified and analyzed in this study. The KPIs can help decision-makers toidentify an optimal solution between alternatives, which presents the maximum sustainabilityperformance.

Keywords Building energy efficiency, Sustainability, Hotel, Fuzzy set theory,Key performance indicators, China

Paper type Research paper

1. Introduction1.1 Research backgroundExisting buildings require over 40 percent of the world’s total final energyconsumption, and account for 24 percent of world CO2 emissions (International EnergyAgency, 2006). Buildings also represent an important and increasing component ofChina’s energy consumption. For the past 20 years, Building Energy Consumption(BEC) in China has been increasing at more than 10 percent each year. In 2004,

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FacilitiesVol. 30 No. 9/10, 2012pp. 432-448q Emerald Group Publishing Limited0263-2772DOI 10.1108/02632771211235242

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Building Energy Consumption alone constituted 20.7 percent national energyconsumption and this will be increased to 1/3 by 2010 ( Jiang and Yang, 2006; Lianget al., 2007). Currently, there are nearly 40 billion m2 buildings in China and the urbanbuilding area is up to 14 billion m2. More than 95 percent existing buildings in Chinaare “highly-energy-consuming” (Lin et al., 2005; Long, 2005).

There are dramatic differences in energy usage for different types of buildings.Energy consumption in large-scale public buildings and commercial buildings, such asoffices, hotels, retails, hospitals, and schools, is five to 15 times of that in urbanresidential buildings in China (THUBERC, 2007). For higher impact, BEER programmeshould begin with large-scale/commercial buildings. Hotel building is one type oflarge-scale public/commercial building and its main energy consuming systems are:Heating, ventilation and air conditioning (HVAC); Lighting; Hot water provision;Electricity (lifts, etc.); and Cooking. There is a lack of statistical data about detailenergy consumption in China and hotel energy consumption varies in from onebuilding to another. Varying occupancy rates throughout the year and varied personalpreferences of guests for indoor environment, etc. will lead to different operatingschedules of building services systems and therefore different energy consumptionsituations in hotel buildings. Surveys in 2006 shows that hotels in Beijing have electricconsumption of 100-200 kWh/(m2.a), while the range is 55-144.3 kWh/(m2.a) forChongqing. To the other extreme, 9 starred hotels in Shanghai shows an averageenergy consumption of 2.698GJ/(m2.a). Hotel buildings, in general with high energyconsumption, have a large potential for energy efficiency improvement. In addition, theproperty ownership of most hotel buildings is single, which comparing withmulti-ownership in residential and office building, is easy to deliver BEER in this typeof buildings. Therefore, this research focuses on hotel buildings in China.

1.2 Building energy efficiency retrofit (BEER)Building energy efficiency retrofit (BEER) projects, such as upgrading to newer,better-performing equipment and renovations, are a great way to save on energy billsover the long term. Energy efficiency improvement is a good measure to deal withissues of sustainable development, pollutants emission reduction, high production cost,globe climate change, energy resource shortage and others. Such projects also improvethe healthy environment and indoor air quality, and contribute to employees’ moraleand productivity. Building energy efficiency retrofit (BEER) has significant benefits tosociety, ownership, and occupants in buildings in the following aspects:

. improve environment and reduce CO2 emission;

. stop losing money on utility bills and reduce maintenance cost;

. create jobs and career opportunities;

. improve comfort, safety and productivity in workplace and community spaces;and

. modernize buildings and bring operations in line with best practices, andupgrade staff credentials through training.

BEER help existing buildings improve sustainability and achieve green buildings.Chinese governments from central to local have proposed the Energy Conservation and

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Emission Reduction program in building industry (Papadopoulos et al., 2002;Gorgolewski, 1995; Hong et al., 2006; Qian and Chan, 2010).

1.3 Sustainable BEERSustainable development as a concept has been gaining increasing popularity acrossvarious sectors including the construction industry, since the Bruntland CommissionReport in 1987 (World Commission on Environment Development, 1987).Sustainability consists of different levels of analysis and it is necessary to integratethe sustainable approach into BEER project level. A real sustainable BEER shouldconsider the three dimensions of economic vitality, environmental quality, and socialequity in project level. Recently, more attention is paid to the issue of sustainable urbanrenewal and retrofit (Keeping and Shiers, 1996; Sobotka and Wyatt, 1998; Chan andLee, 2008). Chan and Lee (2008) identified the factors affecting urban renewal in highdensity city. Keeping and Shiers (1996) proposed the “green” refurbishment andanalyzed potential benefits of a “green” approach to building refurbishment. Sitar et al.(2006) considered a model of sustainable renovation of a multi-apartment building. Thesustainable renovation of a building is presented, in which an energy efficientrenovation examines the connection between possibilities of architectural design,renovation technology, and energy efficiency for the heating of the building. Mickaityteet al. (2008) concluded a concept model of sustainable building refurbishment, whichsupports excellent opportunities to reduce energy consumption in buildings as well asencourages other sustainable refurbishment principles implementation which includescitizen’s healthcare, environment protection, rational resource use, information aboutsustainable refurbishment dissemination and stakeholders groups’ awareness. EUlaunched a large research project SUREURO (Sustainable Refurbishment Europe) in2000. SUREURO (2004) has developed models and systems that provide housingorganizations, interested parties; local authorities, town planners, constructioncompanies etc, great opportunities to perform refurbishment processes within anormal time schedule and budget. The effort of SUREURO is to combine availableSUREURO models and systems in the context on which housing people can use thesetools and, to consider what kind of management and participation skills are required inorder to be successful.

1.4 Measurement of sustainable BEERTo apply sustainable development principle into BEER projects, yardsticks formeasuring sustainability performance are needed. There are several sustainabilityperformance measurement tools for existing buildings and retrofit. Most of them aredecision making tools for selecting retrofit scenarios and retrofit actions. Reddy et al.(1993) offered a frame-based decision support model for building refurbishment.Rosenfiels and Shohet (1999) developed a decision support model for semi-automatedselection of renovation alternatives. Alanne (2004) proposed a multi-criteria“knapsack” model to help designers select the most feasible refurbishment actions inthe conceptual phase of a refurbishment project. Dascalaki and Balaras (2004)introduced a new XENIOS methodology for assessing refurbishment scenarios and thepotential of application of renewable energy sources and rational use of energy in thehotel sector. Flourentzou et al. (2002), Caccavelli and Gugerli (2002) presented a retrofitdecision making model for existing buildings. The model brings energy, indoor

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environment quality (IEQ), scenarios, and cost analysis in the decision making process.Martinaitis et al. (2004) and Martinaitis et al. (2007), Zavadskas et al. (2008) proposedmethods for appraising building renovation and energy efficiency improvementprojects in economic perspective. Juan et al. (2010) developed a hybrid decision supportsystem for sustainable office building renovation and energy performanceimprovement.

All the previous models are decision making tools before retrofit is conducted.Another tool named IPMVP (International Performance Measurement & VerificationProtocol) is commonly used in retrofit project to verify and measure the energy savingresult of a retrofit project. Many global organizations have developed comprehensivesustainability assessment systems to promote sustainability in building environments.Current famous comprehensive assessment systems for green or sustainable buildingare LEED developed by US. Green Building Council, BREEAM developed by BREGlobal in the UK, GBTool/SBTool developed by the Green Building Challenge (acollaboration of more than 20 countries), and the HK-BEAM in Hong Kong. Thesesustainable systems have developed several versions and all of them have specialversions for existing buildings. However, most of the existing building sustainableevaluation tools are mainly designed to assess the actual performance of existingbuildings and to give guidance on potential best performance that can be obtainedfrom the buildings. In referring to retrofit project, BRE Global is developing a newstandard to enable the sustainable refurbishment of existing housing entitledBREEAM Domestic Refurbishment.

Previous sustainable measurement models can be mainly classified into twocategories: decision tools for decision making at primary stage of retrofit project, andlabel tools for existing building. However, there is a lack of effective performanceindicators to assess and measure sustainability of BEER projects. The aim of thispaper is to formulate a list of key performance indicators (KPI) for the sustainability ofBEER assessment at project level. This paper comprises four parts. The first partprovides a general introduction to research background and review of BEER andsustainability measurement; the second part outlines the research methodology usedfor identifying the KPIs; the third part analyses and discusses the KPIs forsustainability of BEER in hotel buildings based on the Fuzzy Set Theory; and the lastpart draws the conclusions. It is anticipated that the identified KPIs will serve asvaluable references for measuring sustainability of BEER projects.

2. Research methodologyIn order to achieve the objective stated previously, first, literature review and in-depthinterviews with industry experts and academic researchers were conducted, whichfilters the performance indicators for assessing sustainability. Second, questionnairesurvey was conducted to collect data from various group experts for analyzing thesignificance of the selected performance indicators. Experts were invited to indicate thesignificance of individual indicators by using the five-point Likert scale. Then, dataanalysis was conducted with both reliability and validity of the data were checked bythe statistical tool Statistical Package for the Social Sciences (SPSS). Scale ranking foroverall and each group was established based on the mean values of significance ofindicators. Finally, a model based on the Fuzzy set theory was designed to identify theKey Performance Indicators (KPIs) for sustainability of BEER in hotel buildings.

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2.1 In-depth interviewIn order to identify performance indicators for assessing the sustainability of BEER inhotel buildings, a series of semi-structured interviews with 17 professionals wereconducted. Nine of the professionals were engineering managers of hotels, five wereproject manager from contractor, and three were academic researchers. BEER isrelatively a new business venture in China and there are not many professionalsavailable who have a comprehensive view of BEER to hotel buildings. The 17interviews with senior professional were rare opportunities and the details of theinterviewees are shown in Table I. As the interviewees were senior personnel whocould provide first-hand diverse and rich information, the interviews werepurposefully not structured to facilitate free flow of ideas. The interviews discussedabout four issues:

(1) energy consumption and retrofit measurements of hotel buildings;

(2) understanding of sustainable development theory;

(3) features of good retrofit projects; and

(4) participants’ expectations and evaluation toward the projects.

Questions were open and interviewees were encouraged to add any details that theyconsidered relevant. The interviews were conducted between April and July 2010. Eachof the interviews lasted from one to two hours and the interviews were tape recordedand fully transcribed. After that, a Qualitative Data Analysis (QDA) is conducted to thecollected information through interview and second information from literature. Theanalysis process contains two steps: summarization and compilation. All the collectedinformation and secondhand material from literature was summarized into items.Then, the items with the similar meaning are categorized together and compiled into a

Sector/No Current role CompanyYears of

experience

Hotel (9) Engineering manager South Union Hotel 13Engineering manager Golden Coast Lawton Hotel 8General manager Bohua Harbour View Hotel 17Engineering manager Haikou Huitong Hotel 22Engineering manager Ye Hai Hotel 14Engineering manager Haikou Tower Hotel 25Engineering manager Leaguer Resort Sanya Bay 7Engineering manager Xinyuan Hot Spring Hotel 25Engineering supervisor Sanya Beautiful Spring Spa Garden Resort 12

ESCO (5) General manager Bard Energy Saving Engineering Co. 20General manager Yangpu Oasis Energy Saving Co. 15Vice-general manager Shenzhen Guoneng Power Investment Co. Ltd 15Business manager Shenzhen LED Industry Association 8Contracts manager IET Energy Technology Co. Ltd 5

Academic (3) Professor The Haikou College of Economics 20Post doctor The Hong Kong Polytechnic University 5Lecture The Shenzhen University 6

Table I.Details of the interviews

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performance indicator. In this study, 12 performance indicators are identified (seeTable II).

2.2 Questionnaire surveyData for analyzing the significance of the option list of performance indicators inTable II are collected through a questionnaire survey. In responding the questionnaire,respondents were invited to indicate the level of significance of each performanceindicator. The level of importance is measured on a five-point Likert scale, whereExtremely Unimportant ¼ ‘1’, Unimportant ¼ ‘2’, Neutral ¼ ‘3’, Important ¼ ‘4’ andextremely Important ¼ ‘5’. At the beginning of the questionnaire personal basicinformation of respondents was also collected, such as their position, experience, typeof enterprise, etc.

The questionnaire survey was conducted during October-November 2010. Thequestionnaires were distributed via e-mail, MSN, and personal delivery to increase theresponse and sample representation. The questionnaires were delivered to threegroups of people: participants in hotel engineering department, participants in ESCOs,and other people who know about building energy efficiency and EPC mechanism fromgovernments, consultancies, financing institutes, and academics. The mainconsideration for determining the target population was that they were all familiarwith building energy efficiency and EPC mechanism, and thus could enhance therepresentativeness of perceptions received from these respondents. A total of 400questionnaires were delivered to the respondents. Table III shows that 91 valid copieswere retrieved, which represents a 22.75 percent response rate, which is acceptable andhigher than average response rate for online survey, 10-15 percent (Survey Academy,2010), among which 22 respondents (24.2 percent) were from hotel (project owner), 39

Code Indicators

SPI-1 Cost performanceSPI-2 Time performanceSPI-3 Quality performanceSPI-4 Project profitabilitySPI-5 Hotel function improvementSPI-6 Health and safetySPI-7 Energy consumption & resources savingSPI-8 Hotel energy managementSPI-9 Innovation and improvementSPI-10 Environmental loadingSPI-11 Culture protection and transmissionSPI-12 Stakeholders’ satisfaction

Table II.Selected performance

indicators forsustainability of BEER in

hotel buildings

Type of group Number Percentage (%)

Hotel 22 24.2Contractor (ESCO) 39 42.8Other professionals 30 33.0Total 91 100

Table III.The summary of

responding in the survey

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(42.8 percent) from energy service companies (ESCO) (project contractor), 30 (33.0percent) respondents were professionals from government, academics, consultancies,etc.

2.3 Fuzzy set theory modelThe data for studying KPIs are collected from the previous questionnaire survey.Experts’ opinions are subjective, and involve fuzziness. Fuzzy set theory is thereforeapplied to assist in identifying the KPIs. Since Lotfi A. Zadeh (1965) introduced Fuzzyset theory, it has been applied widely in many areas including engineering,management, and social science. Teodorovic (1994) used fuzzy set theory in solvingcomplex traffic and transportation problems. Cornelissen et al. (2001) developed fuzzymathematical models to assess sustainable development based on context-dependenteconomic, ecological, and social sustainability indicators. Lin et al. (2009) adopted fuzzyset theory to managerial contract analyses. Shen et al. (2010) applied the Fuzzy SetTheory to establish the key assessment indicators (KAIs) for assessing thesustainability performance of infrastructure project.

Fuzzy set theory defines set membership as a possibility distribution. A fuzzy set isa pair (A,m) where A is a set and m is degree of membership of the set A (). For each,m(x) is called the grade of membership of x in (A,m). If mðxÞ ¼ 0, then x is called notincluded in the fuzzy set (A,m); if mðxÞ ¼ 1, x is called fully included; and if0 , mðxÞ , 1, x is called fuzzy member. For a finite set A ¼ {x1; :::; xn}, the fuzzy set(A,m) is often denoted by {mðx1Þ=x1; :::;mðxnÞ=xn}. mðxiÞ=xi means that the degree ofmembership of xi in A is m(xi).

In the questionnaire, the significance of a particular indicator is scored between 1and 5, with the score 3 as a natural level and score 4 as an important level. Therefore, itis reasonable to consider that, if the mean of an indicator’s score is more than 4, thepossibility for indicator to be one of the KPI set is high. Moreover, the value of standarddeviation (SD) should also be given consideration. When determining whether anindicator belongs to the KPI set, the larger SD is, the less significant the indicator willbe. The scoring result from questionnaire survey is usually not in a standard normaldistribution. Here, a parameter Z can be introduced to standard normalize thedistribution and calculate a value for determining whether an indicator should beincluded in KPI set.

Z ¼ ðMean 2 4Þ=SD ð1Þ

According to statistics theory, when Z ¼ 1.65, a 95 percent probability of an indicator’sscore will fall within the range [4,1]. This result can be found in Standard NormalDistribution Table, P(X#1.65) ¼ 0.95. Figure 1 shows the normal distribution of oneindicator’s score. According to the Fuzzy Set Theory, the degree of membership foreach indicator can be described as follows:

mðxiÞ ¼

Z 1

4

f ðxiÞdx ¼ 1 2 Pf ¼ PðX # Z Þ ð2Þ

The degree of membership for each indicator can be calculated by using equation 2. Inorder to decide whether or not an indicator is a KPI, a benchmark value should be

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preset. The m(xi) should meet a certain given value (l), then the indicator Xi will beconsidered as a key performance indicator.

3. Data analysisThe data were analyzed using the SPSS. The reliability of the five-point scale used inthe survey was determined using Cronbach’s coefficient alpha, which measures theinternal consistency among the factors. Previous study suggests that a value ofCronbach’s alpha of 0.7 or above normally indicates a reliable set of items (Ceng andHuang, 2005). The value of this test was 0.761, which was greater than 0.7, indicatingthat the five-point scale measurement was reliable. Three statistical analyses, namely,scale ranking, ANOVA, and Fuzzy set theory analysis, were undertaken on the data.The analysis procedure and findings of the study are detailed in the following sections.

3.1 Ranking of performance indicatorsRanking of various performance indicators was obtained by calculating the means forthe overall sample as well as for separate groups of respondents. If two or more factorshappened to have the same mean value, the one with lower standard deviation wasassigned a higher rank. The ranking results are shown in Table IV. It is evident that allrespondents are conscious about Quality performance (SPI-3), Cost performance(SPI-1), Project profitability (SPI-4), Health and safety (SPI-6), Energy consumption& resources saving (SPI-7), and Stakeholders’ satisfaction (SPI-12). There are somenoticeable differences between the rankings of performance indicators across variousgroups. For example, Hotel energy management (SPI-8) is higher on the agenda ofexperts in hotel than others, because hotel experts consider more hotel operation andmanagement.

3.2 Analysis of variance (ANOVA)In order to clarify whether or not the opinions of the experts from hotel, ESCO, andother areas were the same for each of the nominated factors, a one-way ANOVA test ofsignificance was conducted to explore the existence of any divergence in opinionbetween the different respondents’ groups. A probability value p below 0.05 or even0.01 suggests a high degree of difference of opinion between the groups. Thesignificance levels derived from the one-way ANOVA test for this study are alsoindicated in Table IV. Most of the indicators have the significance levels obtained fromthe one-way ANOVA test being higher than 0.05, except three indicators and two ofthem are lower than 0.01: Hotel energy management (0:022 , 0:05), Innovation andimprovement (0:006 , 0:01), and Hotel function improvement (0:006 , 0:01). This

Figure 1.The normal distribution of

one indicator’s score

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280.

714

4.23

0.62

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Notes

:* S

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(p,

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Table IV.Ranks and ANOVA fordifferent classification ofrespondents

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suggests that there is a consistent opinion for the three groups to most performanceindicators, and there are different opinions for the three groups to the previous 3indicators. Therefore, the collected sample should be treated in three groups separatelyin the following analysis of fuzzy set theory.

3.3 Analysis of KPIs based on fuzzy set theoryAs the survey data comes from three groups of experts, namely, Hotel, ESCO, andother professionals, different groups will result in different means, SDs, Z values, andfuzzy sets, which are represented by AH, AE, and AP respectively. According toequation 1 and equation 2 and data in Table IV, the parameter Z and the degree ofmembership m of each indicator in each group can be calculated. The results of ZH, ZE,ZP, mH(xi), mE(xi), and mP(xi), are shown in Table V.

The final integrated fuzzy set for performance indicators should be calculated fromthe union of 3 fuzzy sets resulted from three groups of data. According to the definitionof the union operator on fuzzy theory by Yager (1980), The Key Performance Indicators(KPIs) fuzzy set can be described as follows (Shen et al., 2010):

A ¼ AH < AE < Ap ¼ x; mAH<AE<ApðxÞ=x [ X

� �ð3Þ

Where

mAH<AE<ApðxÞ ¼ min 1; mAH

ðxÞn þmAEðxÞn þmAp

ðxÞn� �1=n

n oð4Þ

It should be noted that n, which is the number of indicators, must be equal or greaterthan 1. In this study, the number of indicators n ¼ 12. Therefore, the integrated resultmA(xi) was obtained from the union mH(xi), mE(xi), and mP(xi) based on equation 4. Theresults of mA(xi) are also shown in Table V.

In order to identify the KPIs for sustainability of BEER project, the l-cut setapproach is adopted. l-cut set method can transfer a fuzzy set to a classical set. Theoptimist outcome is l ¼ 1 and the worst outcome is l ¼ 0. When l ¼ 0.5, it means thatthe outcome is neither optimistic nor pessimistic. In this study, l ¼ 0.7 is adopted asthe criterion to select KPIs. So considering the indicator xi, if m is equal or greater than0.7, xi is selected as KPI. In this study 8 KPIs for sustainability of BEER in hotelbuildings are selected and ranked by their degree of membership (see Table V). Theseare Quality performance (KPI1), Hotel energy management (KPI2), Cost performance(KPI3), Project profitability (KPI4), Energy consumption & resources saving (KPI5),Health and safety (KPI6), Stakeholders’ satisfaction (KPI7), and Innovation andimprovement (KPI8).

Discussions of findings4.1 KPI1 – Quality performanceQuality performance was ranked both by experts in hotel and ESCO as the top criterionfor sustainability of BEER, other experts ranked it as the second important criterion(see Table IV). Parfitt and Sanvido (1993) defined quality in the construction industryas the totality of features required by a product or services to satisfy given needs, orfitness for purposes. Moreover, quality is the guarantee of fitness of products thatconvinces customers or end users to purchase or use them (Chan and Chan, 2004). Inhotel building energy efficiency retrofit projects, project quality is directly decided by

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Table V.The degree ofmembership of indicatorsfor KPIs

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the renewed energy consumption equipment. The interviewees have also emphasizedthe importance of quality performance and mentioned that some energy efficiencyretrofit projects are “energy saving but not money saving”, because of highmaintenance or replacement cost for poor quality equipment.

4.2 KPI2 – Hotel energy managementThe second key performance indicator is hotel energy management. This is projectoperation management after completing energy efficiency retrofit. In BEER project,operation management is to encourage an appropriate level of hotel building servicesoperating in an environmentally sound manner in term of resource use, energyconsumption and pollution. This operation management criterion has been introducedinto sustainable building tool, BREEAM, as one of main assessment criteria(BREEAM, 2008). Xu and Chan (2010) indicated there are three retrofit measures forbuilding energy efficiency improvement projects: building envelope refurbishment,energy consumption equipment replacement, and energy management systemimprovement. Energy management is more important in BEER projects ascompared to other types of projects.

However, the ranking of this criterion is not high, except the hotel experts hasranked it as second important criterion. In ANOVA, this criterion has a significancelevel of 0:022 , 0:05 (see Table IV), which also indicated their difference opinions tothis indicator. Hotel clients and owners of BEER project have a vested interest in thecost of hotel operation and they will operate energy system in the long term operationmanagement period. That is why hotel experts put such a higher emphasis on energymanagement.

4.3 KPI3 – Cost performanceCost performance is another key performance indicator for economic sustainability. Itis defined as the degree to which the general conditions promote the completion of aproject within the estimated budget (Bubshait and Almohawis, 1994). Costperformance was ranked first by ESCO experts and second by other professionals,but it was ranked seventh by hotel experts (see Table IV). This pattern of rankingwould seem to reflect that hotel clients do not seems to be too concern with the projectdelivery cost. Cost indeed is very important both for clients and contractor. However,because of some market mechanism (such as energy performance contracting-EPCmechanism) and competition of energy saving products, the contractor and equipmentsupplier will invest the capital in BEER project and get pay back from future energysaving. Therefore, contractors are more concerned about cost than clients

4.4 KPI4 – Project profitabilityIt is understandable to note that Project profitability is ranked high since both theclients and contractors, like most private organizations, are profit-oriented and aim tomake more profit. There is a problem that “sustainable” business practices cansometimes entail profit sacrifices. A conflict thus arises between “green” andprofitability. To the extent that they do not increase profitability, however, andperhaps even sacrifice profits, sustainability promoting business efforts go against theingrained corporate principle of shareholder-wealth maximization (Chan et al., 2009;Sneirson, 2009). If we believe the professionals are more neutral in dealing with conflict

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arises between“green”and profitability to deliver “sustainability”, then it is notsurprise that they rank “project profitability” lower than the other two parties.Sustainability is an approach to balance profitability and “green”. Here, projectprofitability is one of critical important indicators to assess sustainability performanceof BEER project.

4.5 KPI5 – Energy consumption & resources savingAll sustainable assessment tools take energy as an important criterion (BREEAM,LEED, SBTool, HK-BEAM, China-GBS etc.). All the three groups in this surveyconsider energy consumption & resources saving as a critical important indicator. Thisstudy focuses on energy efficiency project. Saving energy and reducing emission ofCO2 is the final goal of these projects. Besides project mission, energy and resourcessaving should also be considered during retrofit process. The same reasons for the KPI“Hotel energy management” apply to “Energy consumption & resources saving”. Hotelclients are more interested in the energy cost of hotel operation comparing with theothers two groups.

4.6 KPI6 – Health and safetyHealth and safety is the sixth key performance indicator (see Table V). Construction isa high-risk activity. Therefore, the most important social responsibility is to ensurethat everyone is safe during working. The safety, health, and well-being are ofparamount importance to conduct retrofit projects. Safety programs should beguaranteed to minimize hazards in the workplace and continually monitor safetyprogress to ensure that project programs are working as effectively as possible.Besides on-site safety management, health and safety for occupants needs extraattention in hotel retrofit, because there are hotel users occupying the building duringretrofitting works. In addition, hotel customers take the hotel as their “home away fromhome”.

4.7 KPI7 – Stakeholders’ satisfactionStakeholders’ satisfaction has been proposed as an important measure for projectsuccess in the last decade (Chan and Chan, 2004; Torbica and Stroh, 2001; Cheung et al.,2000; Liu and Walker, 1998; Parfitt and Sanvido, 1993; Sanvido et al., 1992). Keystakeholders in a typical construction project include: client, contractor, and end users(public). Under sustainable development principle, the result of project should balanceand satisfy all the stakeholders’ needs and expectation. In this study all groupsconsider this performance indicator is a key important one for measuring sustainableBEER.

4.8 KPI8 – Innovation and improvement“Sustainability” is a new challenge that calls for new approaches. Innovation andimprovement is an important criterion for sustainable development assessment. InBEER projects, this issue means applying the new technologies and renewable energysources into these projects. Attitudes to this criterion are different between hotelexperts and other experts. The p-value is 0:006 , 0:01 (see Table IV), which indicatethe existence of a disparity among the respondent groups. According to previousinterviews, it can be summarized that hotel clients expect a new product after the

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BEER retrofit, and get the potential energy saving fully by using new technologies,while contractors prefer to apply mature technologies and simple retrofit measuresbecause contractors provide project capital and take a high risk. This can explain thathotel experts gave a high ranking to this indicator than other experts.

4.9 Other performance indicatorsAccording to the developed fuzzy theory model, other four selected performanceindicators, having the integrated m(xi) of less than 0.7, were not considered as keyperformance indicators (see Table V): time performance, hotel function improvement,environmental loading, and culture protection and transmission. Time performance isone criterion within the “Iron Triangle” of time-cost-quality requirements inconstruction projects. However, the BEER projects in hotel are normally small andsimple, which will not impact on too much the normal operation of hotel. Either thestakeholders pay little attention to this criterion or their concerns are embedded in thecost factor. Hotel function is affected by many other issues beyond the performance ofa building and hence it will stay the same or little change after the BEER retrofit. Theworkplace of these projects is in the equipment room of a hotel building, which willcause little environmental impact to indoor and outdoor environment. Withoutrefurbishment of building envelop or interior decoration, the indicator, cultureprotection and transmission, may not be affected so much and hence this indicator isconsidered the interviewees to be not significant to these projects.

5. ConclusionsBuilding Energy Efficiency Retrofit (BEER) projects play major roles in energy & costsaving, carbon reduction, and environmental protection, particularly in hotel buildings.Their sustainability performance should deserve more attention when implementingthe BEER projects. This study identified and ranked the KPIs for the sustainability ofBEER in hotel buildings according to their importance, which is based on the views ofexperts with experience in BEER. Fuzzy set theory was adopted in identifying theKPIs. Eight KPIs were selected from primary 12 selected performance indicators. Theyare collected based on in-depth interview and literature review. They are:

(1) quality performance;

(2) hotel energy management;

(3) cost performance;

(4) project profitability;

(5) energy consumption & resources saving;

(6) health and safety;

(7) stakeholders’ satisfaction; and

(8) innovation and improvement.

This study focuses on the sustainability at project level. The traditional projectmanagement pays attention to project performance of “iron triangle” – cost, time, andquality. Quality and cost performances still have higher priorities in this study’sfindings. Other indicators related to energy, environment, and people’s satisfaction arealso identified as sustainable objectives.

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This research focuses on hotel buildings in China. Some indicators, such as “hotelenergy management”, are unique for hotel buildings. Because of the differentrequirements for building types and building ownerships, the KPIs of sustainability ofBEER for different buildings may be variable. Findings in this study for hotelbuildings may not be directly relevant to other types building. For further study,quantitative sub-indicators could be identified to measure the eights KPIs.Furthermore, the weighting system as well as benchmarking of each sub-indicatorcould be examined in future studies. By using identified KPIs, the sustainabilityperformance of hotel BEER projects can be assessed. The application of KPIs can alsohelp decision-maker to identify an optimal solution between alternatives, whichpresents the maximum sustainability performance.

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About the authorsPeng Peng Xu is currently a PhD candidate at the Department of Building and Real Estate, TheHong Kong Polytechnic University. His research focuses on energy performance contracting(EPC) mechanisms and sustainable construction. Peng Peng Xu is the corresponding author andcan be contacted at: xupp.cn@gmail.com

Professor Edwin H.W. Chan studied architecture in England and then learned law at LondonUniversity and Hong Kong University. He obtained his PhD degree from King’s College, LondonUniversity on construction dispute management. He is a Chartered Architect (AuthorizedPerson), Chartered Surveyor and also a Barrister-at-Law called to the UK and Hong Kong Bars.He is currently involved with teaching, research and consultancy on development control policy,green/healthy building, and construction law/dispute resolution.

Queena K. Qian is currently a PhD candidate at the Department of Building and Real Estate,The Hong Kong Polytechnic University. Her research focuses on building energy efficiency andenergy policy.

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