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Article
Publication date: 1 July 2001

Hilary A. Davies and Eric K.S. Chan

Hong Kong has experienced an average annual growth in final energy consumption of 4.7 per cent over the last ten years. An initiative being undertaken by a small number of…

Abstract

Hong Kong has experienced an average annual growth in final energy consumption of 4.7 per cent over the last ten years. An initiative being undertaken by a small number of government and commercial organisations is to limit their own consumption of electricity through performance contracting. Performance contracting is essentially a partnering process, where a client organisation partners with an energy management firm to identify and achieve energy savings for the client organisation. The research undertaken for this project has identified a number of factors that are considered to affect the success of performance contracting in Hong Kong. In a survey of practitioners, who have experience of performance contracting, some of the key benefits of this approach identified include the fact that there are substantial energy cost savings to be made. These savings are guaranteed by the partnering energy saving company and there are overall improved operational and plant efficiency gains. Key requirements for the success of such schemes include the setting‐up of an agreed energy baseline against which to measure results and human factors such as commitment to the enterprise at all levels of the organisation and trust between the co‐operating organisations. The paper expands the discussion on the benefits, obstacles and necessary ingredients for performance contracting that are likely to be applicable not just to Hong Kong but to the successful implementation of any such scheme.

Details

Facilities, vol. 19 no. 7/8
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 1 May 2001

John D. Gilleard and Mary Wan Yeung Kam‐shim

Energy performance contracting is not common in Asia, where fast economic growth in many parts of the region during the last two decades has taken precedence over people’s…

Abstract

Energy performance contracting is not common in Asia, where fast economic growth in many parts of the region during the last two decades has taken precedence over people’s concern for energy saving. Explores how one particular group of facility managers introduced the concept of energy performance contracting in a context where bureaucratic tradition had always rewarded control rather than relationship development. Considers the roles and expectations of key players – the energy savings contractor, and the contracting organisation, who had both new style facility management and traditional maintenance staff working on the project. Discusses the issues that nearly derailed the project and how these were eventually overcome. Suggests there is a need for ongoing communication between all partners involved in energy performance contracting, both to overcome barriers to traditional ways of working and also to develop an appreciation for the differing objectives of each partner involved in the contract.

Details

Facilities, vol. 19 no. 5/6
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 1 July 2014

Pan Lee, Tsun Ip Lam and Ren Jye Dzeng

The purpose of this paper is to investigate the current market development of Energy Performance Contracting (EnPC) in Hong Kong and Taiwan, focussing on four key aspects…

Abstract

Purpose

The purpose of this paper is to investigate the current market development of Energy Performance Contracting (EnPC) in Hong Kong and Taiwan, focussing on four key aspects: first, the potential building energy retrofits as an investment for future savings; second, the motivations for building owners toward the use of EnPC; third, the reasons for building owners not using EnPC; and fourth, the different approaches of Hong Kong and Taiwanese governments toward the promotion of EnPC.

Design/methodology/approach

A dual-questionnaire survey was conducted both in Hong Kong and Taiwan, where the same set of questionnaire was sent to the key personnel of the energy services companies (ESCOs) in both regions as identified from the latest member lists of representative trade associations, supplement with 11 structured interviews.

Findings

Apart from explainable differences, the results show the top rankings by the respondents of Hong Kong and Taiwan as follows: “Potential retrofit works” including lighting replacement with efficient fluorescent and light emitting diode lamps and improvement of air-con system. “EnPC Motivations” including owners’ lack of upfront capital and use of energy savings for other purposes may yield better returns; ESCOs’ provision of turnkey services. “Reasons not considering EnPC” including worry about its complexities; lack of familiarity with EnPC and long payback periods. As for promotional efforts for EnPC, the Taiwan government has taken more initiatives to foster its use both technically and financially.

Practical implications

This study identifies market-related motivators and deterrents as experienced by ESCOs in implementing EnPC projects in two developed Asian economies.

Originality/value

This study provides insightful information for the stakeholders about the latest market development of EnPC in Hong Kong and Taiwan.

Details

Journal of Property Investment & Finance, vol. 32 no. 4
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 5 April 2013

Maria Garbuzova‐Schlifter and Reinhard Madlener

The Russian Energy Service Company (ESCO) market emerges rapidly due to the new energy efficiency legislation that has been implemented since 2009. However, a clear…

Abstract

Purpose

The Russian Energy Service Company (ESCO) market emerges rapidly due to the new energy efficiency legislation that has been implemented since 2009. However, a clear identification of the Russian ESCOs, comparable to those operating on the basis of Energy Performance Contracting (EPC) in the Western markets, remains rather difficult. Hence, aside from the independent ESCOs identified, further energy service‐providing companies (ESPCs) are within the scope of this survey. This paper aims to address these issues.

Design/methodology/approach

Building on comprehensive qualitative research of the international and Russian academic and non‐academic literature on the ESCO concept and an expert interview, an explorative, questionnaire‐based survey among 161 Russian energy companies and organizations was conducted. A total of 28 usable responses were returned, corresponding to a response rate of 17 per cent. Non‐parametric exact tests are used for the statistical analysis.

Findings

The authors' findings show that only nine of the surveyed ESCOs have acquired energy performance‐based projects. In line with the new energy efficiency legislation, such projects are strongly supported in the state sector but much less so in the commercial sector. Most of the projects are financed either through ESCOs' own funds, direct loans to customers, or by the customers themselves. Russian banks, however, rarely provide direct loans for energy performance‐based projects of ESCOs, but rather prefer to offer financial leasing contracts. The contractual form “guaranteed savings”, which is generally more applicable in mature ESCO markets, is gaining in importance, while “shared savings” is barely used.

Originality/value

This paper delivers, to the best of the authors' knowledge, the first systematic empirical investigation of the Russian ESCO industry, taking into account experiences from the international ESCO markets.

Details

International Journal of Energy Sector Management, vol. 7 no. 1
Type: Research Article
ISSN: 1750-6220

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Article
Publication date: 18 December 2019

Weiping Jiang and Xianbo Zhao

The purpose of this paper is to explore the key factors in generating trust, and the effects of trust on the intention to cooperate in energy performance contracting

Abstract

Purpose

The purpose of this paper is to explore the key factors in generating trust, and the effects of trust on the intention to cooperate in energy performance contracting (EPC), from the perspective of energy saving companies (ESCOs).

Design/methodology/approach

A questionnaire survey was undertaken to collect the data from the experienced project managers in ESCOs. Structural equation modeling was used to test the hypotheses.

Findings

The results revealed that competence, integrity, communication, reciprocity and contract had positive effects on calculative trust and relational trust. Both calculative trust and relational trust, in turn, were found to have positive effects on the intention to cooperate.

Research limitations/implications

The conclusions are derived from the Chinese cultural background and may apply to a certain geographical scope. In addition, this study focused on the perspective of ESCOs but did not consider that of facility owners.

Practical implications

This research would supply guidance for facility owners or users to cultivate trust from ESCOs and achieve cooperation in EPC.

Originality/value

Most of the existing studies have focused on the perspective of facility owners while few have attempted to investigate the perspective of ESCOs. This study contributes to the knowledge body relating to EPC by investigating the relationship between trust and the intention to cooperate from the perspective of ESCOs. In addition, most EPC studies recognized trust as a condition for the successful execution of EPC projects but failed to consider the role of trust in setting up the cooperation relationship prior to project execution.

Details

Engineering, Construction and Architectural Management, vol. 28 no. 1
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 5 June 2017

Andreas H. Glas and Florian C. Kleemann

Performance-based contracting (PBC) links pricing with performance objectives in service business relationships. Although interest in PBC has surged recently, there is…

Abstract

Purpose

Performance-based contracting (PBC) links pricing with performance objectives in service business relationships. Although interest in PBC has surged recently, there is still great uncertainty about the risks, opportunities and challenges. This paper aims to provide a deeper understanding of the contextual factors of PBC and how providers assess them.

Design/methodology/approach

This paper includes conducting a multiple-case study evaluation and analyzes data from 21 cases. Risks, opportunities and contextual factors are identified through interviews, and the case data are analyzed with several methods, including Borda count and cross-tabulation.

Findings

The results show that the most important factors of PBC are clear responsibilities, clear performance indicators, transparent measurement, cooperative culture and a precise utilization profile of core assets. Surprisingly, incentives are of minor perceived relevance. The analysis supports the differentiation of PBC into two subcategories: lean (low integrated) and customized (high integrated) PBC.

Research limitations/implications

While many studies stress the uniqueness of PBC in accordance with the “one-size-does-not-fit-all” mantra, this research differentiates the standardized PBC from a customized one. The findings face the limitations of case study research and qualitative data analysis in general.

Practical implications

Practitioners are provided with guidance to develop either a customized or a standardized PBC.

Originality/value

Previously, broader empirical insights have still been rare; thus, this paper contributes to the PBC literature, as it provides data from multiple cross-industry cases. The findings (e.g. the minor relevance of incentives) stand in contrast to parts of the academic literature and contribute also to the wider service management field.

Details

Journal of Business & Industrial Marketing, vol. 32 no. 5
Type: Research Article
ISSN: 0885-8624

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Article
Publication date: 1 June 2006

Wilco W. Chan and Kenny Ho

Environmental concerns have been increasing in the travel industry. However, most hotels are unwilling to develop an international environmental management system (EMS…

Abstract

Purpose

Environmental concerns have been increasing in the travel industry. However, most hotels are unwilling to develop an international environmental management system (EMS) probably due to a lack of resources and knowledge. In order to encourage more organizations to take part in the EMS, three cases adopting international EMS are investigated to ascertain the ways to support the formation of EMS. Based on their experience, hoteliers are encouraged to team up with green members to apply for research funding for the investigation and implementation of EMS. Also, “energy performance contracting” methods to finance environmental improvement projects in hotels were also discussed.

Design/methodology/approach

A single case study approach was adopted to illustrate the differences in the resources mobilization for setting EMS in these three hotels. A search of documentary evidence and interviews with hotel staff was the main instrument for data collection.

Findings

The Shangri‐la Hotel used its own resources to set up its EMS and strategically used its developed template for other hotels in the group to follow. The other two hotels, Nikko and Grandstanford, adopted a creative and “non‐balance sheet” approach to mobilize resources for the formation of EMS. Both hotels have recourse to external resources including a university's engineering department, hotel management school, green bodies, government funds and trade associations to develop and implement the EMS. The study further identified energy performance contracting as another promising financing tool for the implementation of the energy‐related part of the EMS.

Research limitations/implications

The representative and general nature of the findings are limited to large hotels in metropolitan areas, as the three case hotels are located in the metropolis of Hong Kong.

Practical implications

The findings provide informative details on how to secure external resources to set up internationally recognized environmental management systems and the safe way for hotel operators to trial use energy‐saving facilities.

Originality/value

This study provides indications and details on some creative financing techniques for setting up EMS in hotels. These financial strategies are the first of their kind in print and can serve as a useful reference for hotels to develop international EMS.

Details

International Journal of Contemporary Hospitality Management, vol. 18 no. 4
Type: Research Article
ISSN: 0959-6119

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Article
Publication date: 3 October 2016

Patrick T.I. Lam and Jack S. YU

The purpose of this paper is to demonstrate the growing trend of developing and managing photovoltaic facilities owned by third parties in buildings, as a possible…

Abstract

Purpose

The purpose of this paper is to demonstrate the growing trend of developing and managing photovoltaic facilities owned by third parties in buildings, as a possible alternative to energy performance contracting.

Design/methodology/approach

Based on an established business model template, analysis is carried out on the framework of using third-party finance in the provision of photovoltaic facilities in buildings. Case studies in the USA and China enable comparison of policy tools enabling this approach.

Findings

While barriers exist in the common energy performance contracting approach for renewable installations owned by the building owner, vesting photovoltaic equipment with a third party for a certain period has become a viable business alternative as long as revenue is generated through a power purchase agreement or lease arrangement with the building owner.

Research limitations/implications

The third-party ownership business model works better if sufficient policy incentives exist alongside the revenue brought about by renewable energy. Hence, governments have to create the right environment.

Originality/value

Win-win situations have been identified through case studies in countries with burgeoning renewable energy use in buildings, notably the USA and China, giving new insights on facilities management.

Details

Facilities, vol. 34 no. 13/14
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 6 July 2012

Frédéric Bougrain

The purpose of this paper is to investigate the performance of public‐private partnership (PPP) and the ability of private consortia and public authorities to together…

Abstract

Purpose

The purpose of this paper is to investigate the performance of public‐private partnership (PPP) and the ability of private consortia and public authorities to together develop solutions that reduce building energy consumptions.

Design/methodology/approach

The paper reviews the performance of PPP projects based on criteria such as respect for timely delivery and costs, innovation, service quality and life cycle costing; then a case study focusing on energy saving performance contract (ESPC) is expounded.

Findings

The research indicates that PPP performs well on issues such as respect of timetable and contracted prices but does not establish that PPP promotes innovation, quality of service delivery and life cycle costing. It also appears that energy issues are gradually integrated in contracts in progress under the influence of thermal regulations. Among PPP projects, ESPC focuses on energy savings measures. Their success mainly requires that public authorities have a good knowledge of the status, occupation level and energy consumptions of their buildings. Information disclosure in the contract also reduces uncertainty and creates trust among partners.

Practical implications

The research should raise the awareness of public authorities on imperatives to have a good knowledge of the status, occupation level and energy consumptions of their buildings.

Originality/value

Most PPPs have been evaluated at the design and construction stages. Evaluations of PPPs in operation are less frequent. Examining the first ESPC in operation in France is an original contribution that opens doors for further empirical investigations in this field.

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Article
Publication date: 5 November 2018

Andreas H. Glas, Florian U. Henne and Michael Essig

Performance-based contracting (PBC) is a business model for the adaptive and innovative delivery of product-service systems. In PBC, the provider is paid according to the…

Abstract

Purpose

Performance-based contracting (PBC) is a business model for the adaptive and innovative delivery of product-service systems. In PBC, the provider is paid according to the service performance with the aim of providing monetary incentives to safeguard possible outcomes as much as possible for the PBC customer. Performance measurement and its management are crucial for PBC success and, in particular, for the pay-for-performance link. However, the literature on PBC performance management is rather sparse, and there has been no systematic review on the topic. Thus, the purpose of this paper is to fill that gap and to present a comprehensive and systematic review of performance measurement and management in the PBC context.

Design/methodology/approach

The paper builds on a literature review based on a sample of 102 subject-relevant articles from academic journals. The content analysis follows a two-step procedure. First, the articles are coded following a process-based research framework. Second, the content of each process step is assessed in a qualitative text analysis.

Findings

The results show a surprising scarcity of papers that explicitly address performance management topics in the context of PBC. Only the topics of performance specification and performance indicators are broadly addressed, whereas in all of the other areas, e.g., strategic alignment, data capture and reporting, only limited specific findings could be found.

Research limitations/implications

The paper concludes that future research on performance management in PBC should expand its theoretical framework and empirical efforts in four specific proposed directions.

Originality/value

The paper provides an up-to-date review that is focused on performance management and measurement in the emerging context of PBC.

Details

International Journal of Operations & Production Management, vol. 38 no. 11
Type: Research Article
ISSN: 0144-3577

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