Facilities

Key performance indicators (KPI) for the sustainability of building energy efficiency
retrofit (BEER) in hotel buildings in China
Peng Peng Xu Edwin H.W. Chan Queena K. Qian
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To cite this document:
Peng Peng Xu Edwin H.W. Chan Queena K. Qian, (2012),"Key performance indicators (KPI) for the
sustainability of building energy efficiency retrofit (BEER) in hotel buildings in China", Facilities, Vol. 30 Iss
9/10 pp. 432 - 448
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F
30,9/10 Key performance indicators (KPI)
for the sustainability of building
energy efficiency retrofit (BEER)
432
in hotel buildings in China
Peng 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
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Purpose – Building energy efficiency retrofit (BEER) not only provides excellent opportunities to
reduce overall energy consumption of buildings in a city but also encourages environmental
protection, the rational use of resources, and occupants’ healthcare, which all contribute towards the
sustainability of existing buildings. However, there is a lack of effective performance indicators to
measure the sustainability of BEER projects. The aim of this paper is to formulate a list of key
performance indicators (KPI) for the sustainability assessment of BEER in hotel buildings.
Design/methodology/approach – First, a literature review and in-depth interviews with industry
experts and academic researchers were conducted, which filtered the performance indicators for
assessing sustainability. Second, a questionnaire survey was conducted to collect data from various
groups of experts to analyze the significance of the selected performance indicators. Finally, a model
based on fuzzy set theory was designed to identify the key performance indicators (KPIs) for the
sustainability of BEER.
Findings – Eight KPIs were identified based on fuzzy set theory in this study. They are: quality
performance, hotel energy management, cost performance, project profitability, energy consumption
and resources saving, health and safety, stakeholder satisfaction, and innovation and improvement.
Practical implications – The KPIs of sustainability of BEER identified for hotel buildings in China
in this study can be useful reference for other similar research. However, with the different
requirements for building types and building ownerships, the KPIs of sustainability of BEER for
different buildings may be variable. The findings in this study may not be directly relevant to other
types of building.
Originality/value – Key performance indicators for the sustainability assessment of BEER in hotel
buildings in China are identified and analyzed in this study. The KPIs can help decision-makers to
identify an optimal solution between alternatives, which presents the maximum sustainability
performance.
Keywords Building energy efficiency, Sustainability, Hotel, Fuzzy set theory,
Key performance indicators, China
Paper type Research paper

1. Introduction
1.1 Research background
Existing buildings require over 40 percent of the world’s total final energy
Facilities consumption, and account for 24 percent of world CO2 emissions (International Energy
Vol. 30 No. 9/10, 2012
pp. 432-448 Agency, 2006). Buildings also represent an important and increasing component of
q Emerald Group Publishing Limited China’s energy consumption. For the past 20 years, Building Energy Consumption
0263-2772
DOI 10.1108/02632771211235242 (BEC) in China has been increasing at more than 10 percent each year. In 2004,
 Building Energy Consumption alone constituted 20.7 percent national energy Building energy
consumption and this will be increased to 1/3 by 2010 ( Jiang and Yang, 2006; Liang efficiency
et al., 2007). Currently, there are nearly 40 billion m2 buildings in China and the urban
building area is up to 14 billion m2. More than 95 percent existing buildings in China
are “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 as 433
offices, hotels, retails, hospitals, and schools, is five to 15 times of that in urban
residential buildings in China (THUBERC, 2007). For higher impact, BEER programme
should begin with large-scale/commercial buildings. Hotel building is one type of
large-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 detail
energy consumption in China and hotel energy consumption varies in from one
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building to another. Varying occupancy rates throughout the year and varied personal
preferences of guests for indoor environment, etc. will lead to different operating
schedules of building services systems and therefore different energy consumption
situations in hotel buildings. Surveys in 2006 shows that hotels in Beijing have electric
consumption of 100-200 kWh/(m2.a), while the range is 55-144.3 kWh/(m2.a) for
Chongqing. To the other extreme, 9 starred hotels in Shanghai shows an average
energy consumption of 2.698GJ/(m2.a). Hotel buildings, in general with high energy
consumption, have a large potential for energy efficiency improvement. In addition, the
property ownership of most hotel buildings is single, which comparing with
multi-ownership in residential and office building, is easy to deliver BEER in this type
of 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 bills
over the long term. Energy efficiency improvement is a good measure to deal with
issues of sustainable development, pollutants emission reduction, high production cost,
globe climate change, energy resource shortage and others. Such projects also improve
the healthy environment and indoor air quality, and contribute to employees’ morale
and productivity. Building energy efficiency retrofit (BEER) has significant benefits to
society, 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, and
upgrade 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
 F Emission Reduction program in building industry (Papadopoulos et al., 2002;
30,9/10 Gorgolewski, 1995; Hong et al., 2006; Qian and Chan, 2010).

1.3 Sustainable BEER

Sustainable development as a concept has been gaining increasing popularity across
various sectors including the construction industry, since the Bruntland Commission
434 Report in 1987 (World Commission on Environment Development, 1987).
Sustainability consists of different levels of analysis and it is necessary to integrate
the sustainable approach into BEER project level. A real sustainable BEER should
consider the three dimensions of economic vitality, environmental quality, and social
equity in project level. Recently, more attention is paid to the issue of sustainable urban
renewal and retrofit (Keeping and Shiers, 1996; Sobotka and Wyatt, 1998; Chan and
Lee, 2008). Chan and Lee (2008) identified the factors affecting urban renewal in high
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density city. Keeping and Shiers (1996) proposed the “green” refurbishment and
analyzed potential benefits of a “green” approach to building refurbishment. Sitar et al.
(2006) considered a model of sustainable renovation of a multi-apartment building. The
sustainable renovation of a building is presented, in which an energy efficient
renovation examines the connection between possibilities of architectural design,
renovation technology, and energy efficiency for the heating of the building. Mickaityte
et al. (2008) concluded a concept model of sustainable building refurbishment, which
supports excellent opportunities to reduce energy consumption in buildings as well as
encourages other sustainable refurbishment principles implementation which includes
citizen’s healthcare, environment protection, rational resource use, information about
sustainable refurbishment dissemination and stakeholders groups’ awareness. EU
launched a large research project SUREURO (Sustainable Refurbishment Europe) in
2000. SUREURO (2004) has developed models and systems that provide housing
organizations, interested parties; local authorities, town planners, construction
companies etc, great opportunities to perform refurbishment processes within a
normal time schedule and budget. The effort of SUREURO is to combine available
SUREURO models and systems in the context on which housing people can use these
tools and, to consider what kind of management and participation skills are required in
order to be successful.

1.4 Measurement of sustainable BEER

To apply sustainable development principle into BEER projects, yardsticks for
measuring sustainability performance are needed. There are several sustainability
performance measurement tools for existing buildings and retrofit. Most of them are
decision 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-automated
selection of renovation alternatives. Alanne (2004) proposed a multi-criteria
“knapsack” model to help designers select the most feasible refurbishment actions in
the conceptual phase of a refurbishment project. Dascalaki and Balaras (2004)
introduced a new XENIOS methodology for assessing refurbishment scenarios and the
potential of application of renewable energy sources and rational use of energy in the
hotel sector. Flourentzou et al. (2002), Caccavelli and Gugerli (2002) presented a retrofit
decision making model for existing buildings. The model brings energy, indoor
 environment quality (IEQ), scenarios, and cost analysis in the decision making process. Building energy
Martinaitis et al. (2004) and Martinaitis et al. (2007), Zavadskas et al. (2008) proposed efficiency
methods for appraising building renovation and energy efficiency improvement
projects in economic perspective. Juan et al. (2010) developed a hybrid decision support
system for sustainable office building renovation and energy performance
improvement.
All the previous models are decision making tools before retrofit is conducted. 435
Another tool named IPMVP (International Performance Measurement & Verification
Protocol) is commonly used in retrofit project to verify and measure the energy saving
result of a retrofit project. Many global organizations have developed comprehensive
sustainability assessment systems to promote sustainability in building environments.
Current famous comprehensive assessment systems for green or sustainable building
are LEED developed by US. Green Building Council, BREEAM developed by BRE
Global in the UK, GBTool/SBTool developed by the Green Building Challenge (a
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collaboration of more than 20 countries), and the HK-BEAM in Hong Kong. These
sustainable systems have developed several versions and all of them have special
versions for existing buildings. However, most of the existing building sustainable
evaluation tools are mainly designed to assess the actual performance of existing
buildings and to give guidance on potential best performance that can be obtained
from the buildings. In referring to retrofit project, BRE Global is developing a new
standard to enable the sustainable refurbishment of existing housing entitled
BREEAM Domestic Refurbishment.
Previous sustainable measurement models can be mainly classified into two
categories: decision tools for decision making at primary stage of retrofit project, and
label tools for existing building. However, there is a lack of effective performance
indicators to assess and measure sustainability of BEER projects. The aim of this
paper is to formulate a list of key performance indicators (KPI) for the sustainability of
BEER assessment at project level. This paper comprises four parts. The first part
provides a general introduction to research background and review of BEER and
sustainability measurement; the second part outlines the research methodology used
for identifying the KPIs; the third part analyses and discusses the KPIs for
sustainability of BEER in hotel buildings based on the Fuzzy Set Theory; and the last
part draws the conclusions. It is anticipated that the identified KPIs will serve as
valuable references for measuring sustainability of BEER projects.

2. Research methodology
In order to achieve the objective stated previously, first, literature review and in-depth
interviews with industry experts and academic researchers were conducted, which
filters the performance indicators for assessing sustainability. Second, questionnaire
survey was conducted to collect data from various group experts for analyzing the
significance of the selected performance indicators. Experts were invited to indicate the
significance of individual indicators by using the five-point Likert scale. Then, data
analysis was conducted with both reliability and validity of the data were checked by
the statistical tool Statistical Package for the Social Sciences (SPSS). Scale ranking for
overall and each group was established based on the mean values of significance of
indicators. Finally, a model based on the Fuzzy set theory was designed to identify the
Key Performance Indicators (KPIs) for sustainability of BEER in hotel buildings.
 F 2.1 In-depth interview
30,9/10 In order to identify performance indicators for assessing the sustainability of BEER in
hotel buildings, a series of semi-structured interviews with 17 professionals were
conducted. Nine of the professionals were engineering managers of hotels, five were
project manager from contractor, and three were academic researchers. BEER is
relatively a new business venture in China and there are not many professionals
436 available who have a comprehensive view of BEER to hotel buildings. The 17
interviews with senior professional were rare opportunities and the details of the
interviewees are shown in Table I. As the interviewees were senior personnel who
could provide first-hand diverse and rich information, the interviews were
purposefully not structured to facilitate free flow of ideas. The interviews discussed
about four issues:
(1) energy consumption and retrofit measurements of hotel buildings;
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(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 they
considered relevant. The interviews were conducted between April and July 2010. Each
of the interviews lasted from one to two hours and the interviews were tape recorded
and fully transcribed. After that, a Qualitative Data Analysis (QDA) is conducted to the
collected information through interview and second information from literature. The
analysis process contains two steps: summarization and compilation. All the collected
information and secondhand material from literature was summarized into items.
Then, the items with the similar meaning are categorized together and compiled into a

Years of
Sector/No Current role Company experience

Hotel (9) Engineering manager South Union Hotel 13

Engineering manager Golden Coast Lawton Hotel 8
General manager Bohua Harbour View Hotel 17
Engineering manager Haikou Huitong Hotel 22
Engineering manager Ye Hai Hotel 14
Engineering manager Haikou Tower Hotel 25
Engineering manager Leaguer Resort Sanya Bay 7
Engineering manager Xinyuan Hot Spring Hotel 25
Engineering supervisor Sanya Beautiful Spring Spa Garden Resort 12
ESCO (5) General manager Bard Energy Saving Engineering Co. 20
General manager Yangpu Oasis Energy Saving Co. 15
Vice-general manager Shenzhen Guoneng Power Investment Co. Ltd 15
Business manager Shenzhen LED Industry Association 8
Contracts manager IET Energy Technology Co. Ltd 5
Academic (3) Professor The Haikou College of Economics 20
Table I. Post doctor The Hong Kong Polytechnic University 5
Details of the interviews Lecture The Shenzhen University 6
 performance indicator. In this study, 12 performance indicators are identified (see Building energy
Table II). efficiency
2.2 Questionnaire survey
Data for analyzing the significance of the option list of performance indicators in
Table II are collected through a questionnaire survey. In responding the questionnaire,
respondents were invited to indicate the level of significance of each performance 437
indicator. The level of importance is measured on a five-point Likert scale, where
Extremely Unimportant ¼ ‘1’, Unimportant ¼ ‘2’, Neutral ¼ ‘3’, Important ¼ ‘4’ and
extremely Important ¼ ‘5’. At the beginning of the questionnaire personal basic
information of respondents was also collected, such as their position, experience, type
of enterprise, etc.
The questionnaire survey was conducted during October-November 2010. The
questionnaires were distributed via e-mail, MSN, and personal delivery to increase the
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response and sample representation. The questionnaires were delivered to three

groups of people: participants in hotel engineering department, participants in ESCOs,
and other people who know about building energy efficiency and EPC mechanism from
governments, consultancies, financing institutes, and academics. The main
consideration for determining the target population was that they were all familiar
with building energy efficiency and EPC mechanism, and thus could enhance the
representativeness of perceptions received from these respondents. A total of 400
questionnaires were delivered to the respondents. Table III shows that 91 valid copies
were retrieved, which represents a 22.75 percent response rate, which is acceptable and
higher 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 performance

SPI-2 Time performance
SPI-3 Quality performance
SPI-4 Project profitability
SPI-5 Hotel function improvement
SPI-6 Health and safety
SPI-7 Energy consumption & resources saving
SPI-8 Hotel energy management Table II.
SPI-9 Innovation and improvement Selected performance
SPI-10 Environmental loading indicators for
SPI-11 Culture protection and transmission sustainability of BEER in
SPI-12 Stakeholders’ satisfaction hotel buildings

Type of group Number Percentage (%)

Hotel 22 24.2
Contractor (ESCO) 39 42.8 Table III.
Other professionals 30 33.0 The summary of
Total 91 100 responding in the survey
 F (42.8 percent) from energy service companies (ESCO) (project contractor), 30 (33.0
30,9/10 percent) respondents were professionals from government, academics, consultancies,
etc.

2.3 Fuzzy set theory model

The data for studying KPIs are collected from the previous questionnaire survey.
438 Experts’ opinions are subjective, and involve fuzziness. Fuzzy set theory is therefore
applied to assist in identifying the KPIs. Since Lotfi A. Zadeh (1965) introduced Fuzzy
set theory, it has been applied widely in many areas including engineering,
management, and social science. Teodorovic (1994) used fuzzy set theory in solving
complex traffic and transportation problems. Cornelissen et al. (2001) developed fuzzy
mathematical models to assess sustainable development based on context-dependent
economic, ecological, and social sustainability indicators. Lin et al. (2009) adopted fuzzy
set theory to managerial contract analyses. Shen et al. (2010) applied the Fuzzy Set
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Theory to establish the key assessment indicators (KAIs) for assessing the
sustainability performance of infrastructure project.
Fuzzy set theory defines set membership as a possibility distribution. A fuzzy set is
a 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 not
included in the fuzzy set (A,m); if mðxÞ ¼ 1, x is called fully included; and if
0 , mðxÞ , 1, x is called fuzzy member. For a finite set A ¼ {x1 ; :::; xn }, the fuzzy set
(A,m) is often denoted by {mðx1 Þ=x1 ; :::; mðxn Þ=xn }. mðxi Þ=xi means that the degree of
membership of xi in A is m(xi).
In the questionnaire, the significance of a particular indicator is scored between 1
and 5, with the score 3 as a natural level and score 4 as an important level. Therefore, it
is reasonable to consider that, if the mean of an indicator’s score is more than 4, the
possibility for indicator to be one of the KPI set is high. Moreover, the value of standard
deviation (SD) should also be given consideration. When determining whether an
indicator belongs to the KPI set, the larger SD is, the less significant the indicator will
be. The scoring result from questionnaire survey is usually not in a standard normal
distribution. Here, a parameter Z can be introduced to standard normalize the
distribution and calculate a value for determining whether an indicator should be
included 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’s

score will fall within the range [4,1]. This result can be found in Standard Normal
Distribution Table, P(X#1.65) ¼ 0.95. Figure 1 shows the normal distribution of one
indicator’s score. According to the Fuzzy Set Theory, the degree of membership for
each indicator can be described as follows:
Z 1
mðxi Þ ¼ f ðxi Þdx ¼ 1 2 P f ¼ PðX # Z Þ ð2Þ
4

The degree of membership for each indicator can be calculated by using equation 2. In
order to decide whether or not an indicator is a KPI, a benchmark value should be
 preset. The m(xi) should meet a certain given value (l), then the indicator Xi will be Building energy
considered as a key performance indicator. efficiency
3. Data analysis
The data were analyzed using the SPSS. The reliability of the five-point scale used in
the survey was determined using Cronbach’s coefficient alpha, which measures the
internal consistency among the factors. Previous study suggests that a value of 439
Cronbach’s alpha of 0.7 or above normally indicates a reliable set of items (Ceng and
Huang, 2005). The value of this test was 0.761, which was greater than 0.7, indicating
that 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.
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3.1 Ranking of performance indicators

Ranking of various performance indicators was obtained by calculating the means for
the overall sample as well as for separate groups of respondents. If two or more factors
happened to have the same mean value, the one with lower standard deviation was
assigned a higher rank. The ranking results are shown in Table IV. It is evident that all
respondents 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 some
noticeable differences between the rankings of performance indicators across various
groups. For example, Hotel energy management (SPI-8) is higher on the agenda of
experts in hotel than others, because hotel experts consider more hotel operation and
management.

3.2 Analysis of variance (ANOVA)

In order to clarify whether or not the opinions of the experts from hotel, ESCO, and
other areas were the same for each of the nominated factors, a one-way ANOVA test of
significance was conducted to explore the existence of any divergence in opinion
between the different respondents’ groups. A probability value p below 0.05 or even
0.01 suggests a high degree of difference of opinion between the groups. The
significance levels derived from the one-way ANOVA test for this study are also
indicated in Table IV. Most of the indicators have the significance levels obtained from
the one-way ANOVA test being higher than 0.05, except three indicators and two of
them are lower than 0.01: Hotel energy management (0:022 , 0:05), Innovation and
improvement (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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440
30,9/10

Table IV.

respondents
Ranks and ANOVA for
different classification of
Professionals
Total (n ¼ 91) Hotel (n ¼ 22) ESCO (n ¼ 39) (n ¼ 30) ANOVA
Performance indicators Mean SD Rank Mean SD Rank Mean SD Rank Mean SD Rank F Sig.

SPI-3 Quality performance 4.59 0.59 1 4.59 0.49 1 4.69 0.56 1 4.47 0.67 2 1.222 0.300
SPI-1 Cost performance 4.47 0.63 2 4.36 0.77 7 4.54 0.59 2 4.47 0.56 1 0.524 0.594
SPI-4 Project profitability 4.40 0.75 3 4.45 0.50 3 4.54 0.63 3 4.17 0.97 5 2.181 0.119
SPI-6 Health and safety 4.31 0.67 4 4.45 0.66 4 4.28 0.71 4 4.23 0.62 3 0.720 0.490
SPI-7 Energy consumption & resources saving 4.27 0.55 5 4.43 0.43 5 4.25 0.57 5 4.17 0.58 4 1.495 0.230
SPI-12 Stakeholders’ satisfaction 4.15 0.54 6 4.31 0.43 8 4.13 0.61 6 4.04 0.47 7 1.555 0.217
SPI-8 Hotel energy management 4.13 0.85 7 4.55 0.50 2 3.92 1.00 9 4.10 0.75 6 3.968 0.022 *
SPI-10 Environmental loading 4.07 0.67 8 4.23 0.63 9 4.06 0.66 7 3.95 0.68 8 1.084 0.343
SPI-9 Innovation and improvement 3.89 0.91 9 4.41 0.72 6 3.79 0.88 10 3.63 0.91 10 5.452 0.006 * *
SPI-2 Time performance 3.87 0.71 10 3.91 0.73 11 3.95 0.71 8 3.73 0.68 9 0.806 0.450
SPI-5 Hotel function improvement 3.66 0.89 11 4.18 0.78 10 3.49 0.84 11 3.5 0.89 11 5.404 0.006 * *
SPI-11 Culture protection and transmission 3.51 0.92 12 3.91 0.73 12 3.44 0.90 12 3.3 0.97 12 3.092 0.050
Notes: *Significant at the 0.05 level ( p , 0.05), * *Significant at the 0.01 level ( p , 0.01)
 suggests that there is a consistent opinion for the three groups to most performance Building energy
indicators, and there are different opinions for the three groups to the previous 3
indicators. Therefore, the collected sample should be treated in three groups separately
efficiency
in the following analysis of fuzzy set theory.

3.3 Analysis of KPIs based on fuzzy set theory

As the survey data comes from three groups of experts, namely, Hotel, ESCO, and 441
other professionals, different groups will result in different means, SDs, Z values, and
fuzzy sets, which are represented by AH, AE, and AP respectively. According to
equation 1 and equation 2 and data in Table IV, the parameter Z and the degree of
membership 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 from
the union of 3 fuzzy sets resulted from three groups of data. According to the definition
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of 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 <Ap ðxÞ=x [ X ð3Þ

Where
n  1=n o
mAH <AE <Ap ðxÞ ¼ min 1; mAH ðxÞn þ mAE ðxÞn þ mAp ðxÞn ð4Þ

It should be noted that n, which is the number of indicators, must be equal or greater
than 1. In this study, the number of indicators n ¼ 12. Therefore, the integrated result
mA(xi) was obtained from the union mH(xi), mE(xi), and mP(xi) based on equation 4. The
results of mA(xi) are also shown in Table V.
In order to identify the KPIs for sustainability of BEER project, the l-cut set
approach is adopted. l-cut set method can transfer a fuzzy set to a classical set. The
optimist outcome is l ¼ 1 and the worst outcome is l ¼ 0. When l ¼ 0.5, it means that
the outcome is neither optimistic nor pessimistic. In this study, l ¼ 0.7 is adopted as
the criterion to select KPIs. So considering the indicator xi, if m is equal or greater than
0.7, xi is selected as KPI. In this study 8 KPIs for sustainability of BEER in hotel
buildings are selected and ranked by their degree of membership (see Table V). These
are 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 and
improvement (KPI8).

Discussions of findings
4.1 KPI1 – Quality performance
Quality performance was ranked both by experts in hotel and ESCO as the top criterion
for sustainability of BEER, other experts ranked it as the second important criterion
(see Table IV). Parfitt and Sanvido (1993) defined quality in the construction industry
as the totality of features required by a product or services to satisfy given needs, or
fitness for purposes. Moreover, quality is the guarantee of fitness of products that
convinces customers or end users to purchase or use them (Chan and Chan, 2004). In
hotel building energy efficiency retrofit projects, project quality is directly decided by
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442

for KPIs
Table V.
30,9/10

The degree of
membership of indicators
Indicator set Hotel ESCO Professionals
Integrated
X MH SDH ZH mH(xi) ME SDE ZE mE(xj) MP SDP ZP mP(xk) m(xi)

SPI- Quality performance 4.59 0.49 1.202 0.885 4.69 0.56 1.232 0.891 4.47 0.67 0.697 0.757 0.947 * KPI1
3
SPI- Hotel energy management 4.55 0.50 1.095 0.863 3.92 1.00 20.077 0.469 4.10 0.75 0.134 0.553 0.864 * KPI2
8
SPI- Cost performance 4.36 0.77 0.471 0.681 4.54 0.59 0.909 0.818 4.47 0.56 0.831 0.797 0.861 * KPI3
1
SPI- Project profitability 4.45 0.50 0.913 0.819 4.54 0.63 0.849 0.802 4.17 0.97 0.172 0.568 0.860 * KPI4
4
SPI- Energy consumption 4.43 0.43 1.010 0.844 4.25 0.57 0.437 0.669 4.17 0.58 0.288 0.613 0.849 * KPI5
7 & resources saving
SPI- Health and safety 4.45 0.66 0.693 0.756 4.28 0.71 0.395 0.654 4.23 0.62 0.379 0.648 0.774 * KPI6
6
SPI- Stakeholders’ satisfaction 4.31 0.43 0.709 0.761 4.13 0.61 0.219 0.587 4.04 0.47 0.089 0.535 0.765 * KPI7
12
SPI- Innovation and improvement 4.41 0.72 0.570 0.716 3.79 0.88 -0.232 0.408 3.63 0.91 20.402 0.344 0.716 * KPI8
9
SPI- Environmental loading 4.23 0.63 0.358 0.640 4.06 0.66 0.097 0.539 3.95 0.68 20.074 0.470 0.647
10
SPI- Hotel function improvement 4.18 0.78 0.234 0.593 3.49 0.84 20.608 0.272 3.50 0.89 20.565 0.286 0.593
5
SPI- Time performance 3.91 0.73 2 0.124 0.451 3.95 0.71 20.072 0.471 3.73 0.68 20.392 0.347 0.490
2
SPI- Culture protection and 3.91 0.73 2 0.124 0.451 3.44 0.90 20.627 0.265 3.30 0.97 20.721 0.236 0.451
11 transmission
Note: *The degree of membership is more than 0.7
 the renewed energy consumption equipment. The interviewees have also emphasized Building energy
the importance of quality performance and mentioned that some energy efficiency efficiency
retrofit projects are “energy saving but not money saving”, because of high
maintenance or replacement cost for poor quality equipment.

4.2 KPI2 – Hotel energy management

The second key performance indicator is hotel energy management. This is project 443
operation management after completing energy efficiency retrofit. In BEER project,
operation management is to encourage an appropriate level of hotel building services
operating in an environmentally sound manner in term of resource use, energy
consumption and pollution. This operation management criterion has been introduced
into sustainable building tool, BREEAM, as one of main assessment criteria
(BREEAM, 2008). Xu and Chan (2010) indicated there are three retrofit measures for
building energy efficiency improvement projects: building envelope refurbishment,
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energy consumption equipment replacement, and energy management system

improvement. Energy management is more important in BEER projects as
compared to other types of projects.
However, the ranking of this criterion is not high, except the hotel experts has
ranked it as second important criterion. In ANOVA, this criterion has a significance
level of 0:022 , 0:05 (see Table IV), which also indicated their difference opinions to
this indicator. Hotel clients and owners of BEER project have a vested interest in the
cost of hotel operation and they will operate energy system in the long term operation
management period. That is why hotel experts put such a higher emphasis on energy
management.

4.3 KPI3 – Cost performance

Cost performance is another key performance indicator for economic sustainability. It
is defined as the degree to which the general conditions promote the completion of a
project within the estimated budget (Bubshait and Almohawis, 1994). Cost
performance 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 ranking
would seem to reflect that hotel clients do not seems to be too concern with the project
delivery cost. Cost indeed is very important both for clients and contractor. However,
because of some market mechanism (such as energy performance contracting-EPC
mechanism) and competition of energy saving products, the contractor and equipment
supplier will invest the capital in BEER project and get pay back from future energy
saving. Therefore, contractors are more concerned about cost than clients

4.4 KPI4 – Project profitability

It is understandable to note that Project profitability is ranked high since both the
clients and contractors, like most private organizations, are profit-oriented and aim to
make more profit. There is a problem that “sustainable” business practices can
sometimes entail profit sacrifices. A conflict thus arises between “green” and
profitability. To the extent that they do not increase profitability, however, and
perhaps even sacrifice profits, sustainability promoting business efforts go against the
ingrained corporate principle of shareholder-wealth maximization (Chan et al., 2009;
Sneirson, 2009). If we believe the professionals are more neutral in dealing with conflict
 F arises between“green”and profitability to deliver “sustainability”, then it is not
30,9/10 surprise that they rank “project profitability” lower than the other two parties.
Sustainability is an approach to balance profitability and “green”. Here, project
profitability is one of critical important indicators to assess sustainability performance
of BEER project.

444 4.5 KPI5 – Energy consumption & resources saving

All sustainable assessment tools take energy as an important criterion (BREEAM,
LEED, SBTool, HK-BEAM, China-GBS etc.). All the three groups in this survey
consider energy consumption & resources saving as a critical important indicator. This
study focuses on energy efficiency project. Saving energy and reducing emission of
CO2 is the final goal of these projects. Besides project mission, energy and resources
saving should also be considered during retrofit process. The same reasons for the KPI
“Hotel energy management” apply to “Energy consumption & resources saving”. Hotel
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clients are more interested in the energy cost of hotel operation comparing with the
others two groups.

4.6 KPI6 – Health and safety

Health and safety is the sixth key performance indicator (see Table V). Construction is
a high-risk activity. Therefore, the most important social responsibility is to ensure
that everyone is safe during working. The safety, health, and well-being are of
paramount importance to conduct retrofit projects. Safety programs should be
guaranteed to minimize hazards in the workplace and continually monitor safety
progress to ensure that project programs are working as effectively as possible.
Besides on-site safety management, health and safety for occupants needs extra
attention in hotel retrofit, because there are hotel users occupying the building during
retrofitting works. In addition, hotel customers take the hotel as their “home away from
home”.

4.7 KPI7 – Stakeholders’ satisfaction

Stakeholders’ satisfaction has been proposed as an important measure for project
success 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). Key
stakeholders in a typical construction project include: client, contractor, and end users
(public). Under sustainable development principle, the result of project should balance
and satisfy all the stakeholders’ needs and expectation. In this study all groups
consider this performance indicator is a key important one for measuring sustainable
BEER.

4.8 KPI8 – Innovation and improvement

“Sustainability” is a new challenge that calls for new approaches. Innovation and
improvement is an important criterion for sustainable development assessment. In
BEER projects, this issue means applying the new technologies and renewable energy
sources into these projects. Attitudes to this criterion are different between hotel
experts and other experts. The p-value is 0:006 , 0:01 (see Table IV), which indicate
the existence of a disparity among the respondent groups. According to previous
interviews, it can be summarized that hotel clients expect a new product after the
 BEER retrofit, and get the potential energy saving fully by using new technologies, Building energy
while contractors prefer to apply mature technologies and simple retrofit measures efficiency
because contractors provide project capital and take a high risk. This can explain that
hotel experts gave a high ranking to this indicator than other experts.

4.9 Other performance indicators

According to the developed fuzzy theory model, other four selected performance 445
indicators, having the integrated m(xi) of less than 0.7, were not considered as key
performance indicators (see Table V): time performance, hotel function improvement,
environmental loading, and culture protection and transmission. Time performance is
one criterion within the “Iron Triangle” of time-cost-quality requirements in
construction projects. However, the BEER projects in hotel are normally small and
simple, which will not impact on too much the normal operation of hotel. Either the
stakeholders pay little attention to this criterion or their concerns are embedded in the
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cost factor. Hotel function is affected by many other issues beyond the performance of
a building and hence it will stay the same or little change after the BEER retrofit. The
workplace of these projects is in the equipment room of a hotel building, which will
cause little environmental impact to indoor and outdoor environment. Without
refurbishment of building envelop or interior decoration, the indicator, culture
protection and transmission, may not be affected so much and hence this indicator is
considered the interviewees to be not significant to these projects.

5. Conclusions
Building Energy Efficiency Retrofit (BEER) projects play major roles in energy & cost
saving, carbon reduction, and environmental protection, particularly in hotel buildings.
Their sustainability performance should deserve more attention when implementing
the BEER projects. This study identified and ranked the KPIs for the sustainability of
BEER in hotel buildings according to their importance, which is based on the views of
experts with experience in BEER. Fuzzy set theory was adopted in identifying the
KPIs. Eight KPIs were selected from primary 12 selected performance indicators. They
are 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 project
management pays attention to project performance of “iron triangle” – cost, time, and
quality. Quality and cost performances still have higher priorities in this study’s
findings. Other indicators related to energy, environment, and people’s satisfaction are
also identified as sustainable objectives.
 F This research focuses on hotel buildings in China. Some indicators, such as “hotel
30,9/10 energy management”, are unique for hotel buildings. Because of the different
requirements for building types and building ownerships, the KPIs of sustainability of
BEER for different buildings may be variable. Findings in this study for hotel
buildings may not be directly relevant to other types building. For further study,
quantitative sub-indicators could be identified to measure the eights KPIs.
446 Furthermore, the weighting system as well as benchmarking of each sub-indicator
could be examined in future studies. By using identified KPIs, the sustainability
performance of hotel BEER projects can be assessed. The application of KPIs can also
help decision-maker to identify an optimal solution between alternatives, which
presents the maximum sustainability performance.
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About the authors

Peng Peng Xu is currently a PhD candidate at the Department of Building and Real Estate, The
Hong Kong Polytechnic University. His research focuses on energy performance contracting
(EPC) mechanisms and sustainable construction. Peng Peng Xu is the corresponding author and
can be contacted at: xupp.cn@gmail.com
Professor Edwin H.W. Chan studied architecture in England and then learned law at London
University and Hong Kong University. He obtained his PhD degree from King’s College, London
University on construction dispute management. He is a Chartered Architect (Authorized
Person), 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 and
energy policy.

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