Construction/Engineering firms have been managing knowledge informally for years but the challenges facing industry today mean that most organisations now need a more structured coherent approach to knowledge management. The capture and re-use of learning from projects is considered difficult because teams often move on to the next project before completion. These factors can limit the flow of information, create barriers to learning and often lead to wastage and poor performance. This paper discusses a practical way in which to assess and implement Knowledge Management. It argues the importance of aligning KM initiatives to the business goals and managing the key aspects of people, processes and technology equally.
A study was undertaken to evaluate KM best practices used by leading companies and in the construction industry. Information was gathered by: interviewing project teams at a FTSE100-listed engineering company; applying strategic analysis techniques; and reviewing literature. A gap analysis identified key shortcomings with the current knowledge management approach at the FTSE100 Company. A key finding was the non-alignment of KM to business goals, which was addressed using Critical Success Factor analysis. Other findings related to: lack of people communication; non standard information systems and not knowing where to find knowledge.
Data from the environmental analysis supported the argument by Egan (1998), such as the importance of people, customers and developing relationships with the supplier. It also highlighted opportunities and weaknesses of working with a limited number of clients. CSF (Rockart, 1979) proved successful because it prompted the definition of group objectives which could then be used to align KM goals (Probst et al, 2001). The approach to Porters Value Chain prompted the outline of the key processes as illustrated in figure 4.1 highlighting the primary tasks involved in a construction project from start to finish.
The literature review took into account
arguments from theorists whose expertise included: learning Argyris
(1990) Hwang (2003); culture Nonaka and Takeuchi
(1995); and communication Berlo (1960). It also
included arguments from people considered specialists in the field of
implementing KM: Skyrme (1999); Probst
(et al, 2001); Collinson
and Parcell (2002); and
Key Words: Knowledge management, culture, people, process, technology, construction industry
Knowledge sharing is not a new concept; it was noted that a business’s most important asset was its ability to process information, (Hayek, 1945). In the 1960s it was becoming apparent that rather than the semi-skilled production work, the amount of knowledge held by groups of individual workers was becoming more important to organisational success. This argument is supported by Drucker (1969) who stated that “Knowledge is the central capital, the cost centre and the crucial resource of the economy.” More important are: the dynamics of information and knowledge; how people assimilate it; exchange and combine it to make new things out of it.
Engineering is a knowledge-based industry. Even small projects need ideas, knowledge and experience from many sources – including people, documents and electronic media. Construction/Engineering firms have been managing knowledge informally for years but the challenges facing industry today mean that most organisations now need a more structured coherent approach to knowledge management (Constructing Excellence, 2004). Projects are usually structured into stages with tight deadlines and have different teams assigned to them. The capture and re-use of learning from projects is considered difficult, because teams often break-up before completion and move to the next project. These characteristics limit the flow of information and can create barriers to learning.
This paper outlines an approach to assessing and implementing Knowledge Management. It highlights the importance of aligning KM initiatives to the business goals and managing all three key aspects equally.
Such an approach was used to assess the status of KM in a FTSE100-listed engineering company. For the purpose of this paper the FTSE100 listed company will be referred to as Company X. The group had already made a substantial investment in Knowledge Management, such as a group intranet and local intranets. The total expenditure within the Group was in excess of £1m p.a. However, the group continued to manage knowledge in an ad-hoc way and had not achieved the level of benefits (innovative ideas and customer feedback) expected from the sharing of project information.
The study involved working with Company X for 6 months to evaluate KM best practices used within the Engineering industry and other markets. Findings from this research were used to highlight key differences at Company X and where improvements could be made.
2. KM – A Review Of The Literature
2.1. Defining Knowledge
In today’s business world vast amounts of data and information is
filtered through an organisation. The understanding
of data and information in relation to knowledge has often caused confusion
among management and at worst has resulted in knowledge management project
Nonaka and Takeuchi (1995) suggest that knowledge, unlike information, is about beliefs and commitment. However, Ashton (1998) and Earl (2001) argue that knowledge needs to be captured and codified as much as possible in order to exploit and leverage it for the organisation’s benefit. Codification in organisations converts knowledge into accessible and applicable formats. When Knowledge users categorise knowledge, describe, map and model it, then it can be simulated and embedded in the business rules and processes. Polanyi (1966) proposes grouping knowledge into two distinct types. Tacit knowledge is personal, context-specific and therefore hard to formalise and communicate. Explicit knowledge is codified, more formal and easier to transmit
Tacit knowledge which is gained through experience is often difficult to articulate. If it is not externalized, then it may be lost through employee turnover and knowledge hoarding. Explicit knowledge is more formal and systematic. However, if information is incorrect, obsolete or mismanaged then this can lead to an overall loss of Knowledge. Nonaka and Takeuchi (1995) believe that unless shared knowledge (Tacit) becomes explicit it cannot be easily leveraged by an organisation. Only when tacit and explicit knowledge start interacting are the opportunities for innovation created, thereby enabling a continuous and dynamic interaction which is often referred to as the knowledge spiral. It is important to note that the interaction between tacit and explicit knowledge is performed by an individual and not the organisation.
Information systems are an integral part of delivering knowledge management initiatives and a great deal of emphasis has been placed on software tools. In fact the earlier knowledge management initiatives were driven by technology, such as, document management systems, the evolution of the internet and email. In essence technology championed knowledge management, especially the sharing of explicit knowledge which is easier to codify.
The soft and hard elements of People, Process and Technology reflect the most important factors involved in capturing, disseminating and sharing knowledge. All three elements need to be balanced to ensure that the full benefits of knowledge sharing are exploited. To consider only people and process and neglect technology will fail to capitalise on IT which enhances the sharing of explicit knowledge and makes it more widely available. To focus only on process and technology without people could lead to a resistance to make any change. Finally, to focus only on people and technology without process runs the risk that the past will become automated.
Collison and Parcell (2002) talk about investing time and energy in processes and technologies which stimulate connections between people. They suggest that there are two main routes for seeking out knowledge as described in Figure 1:
¨ What do others know – search them out
¨ What is known – what has already been captured?
This approach supports the SECI process (Nonaka et al, 2000) where socialisation is about bringing people together to share tacit knowledge and combination which sorts and reconfigures existing explicit knowledge. The moderator maintains and updates the body of knowledge, which to remain useful should be refreshed frequently.
Figure 1: Capture & Connectivity (Adapted from Collison and Parcell, 2002)
Collison and Parcell (2002) also refer to Knowledge management as encompassing organisational learning, human resources and technology:
¨ connecting the people who know, and the behaviours to ask, listen and share,
¨ processes to simplify sharing, validation and distillation,
¨ common reliable technology infrastructure to facilitate sharing
Finally, knowledge management needs to be linked to the overall business goals to ensure compliance. Companies should develop their knowledge in a targeted way and not leave it to develop randomly (Probst, et al 2001). The aim is to develop skills and knowledge which is relevant to the organisation’s objectives.
The role of people in knowledge management is one of the most important and complex elements to work with. The behaviour of people is often influenced by their beliefs, different values and attitudes, as well as the organisation culture of the environment in which they work. Influencing what people believe should lead to changes in values, attitudes and ultimately the way in which knowledge is shared - behaviour. Trying to get people to do things differently is not so straight forward because people can easily fall back on defensive routines (Argyris, 1990). In a recent study Hwang (2003) believes that unlearning is often as difficult as learning, if not more. To get people to change the way that they do things will also require a level of willingness from the individual. People need to feel valued, that they belong in a community and that their involvement is challenging and rewarding (Goffee and Jones, 2001).
Business processes are the activities and tasks that we do each day at work. The way people perform processes will have an impact on customer satisfaction and the difference an individual can make to their organisation. In essence they can effect the way information and knowledge is shared around the organisation. Knowledge sharing can yield direct customer value (Probst et al, 2001). In Engineering, standard processes such as, Winning, Design, Build and Review are used by the industry. The challenge is how to embed knowledge sharing practices within these stages. Projects teams are often temporary and disband at the end of a project before there is time to reflect and capture new information and knowledge. Thereby, new project team members need to undergo the learning cycle again (Sommerville and Dalziel, 1998).
2.3. Hard Aspects Of Knowledge
Technologies capture, store and distribute structured knowledge for use by people. According to Ruggles (1997) knowledge management systems are broadly defined technologies which enhance and enable knowledge generation, codification and transfer.
Technology is a great enabler of knowledge sharing, however, it is the value added by people in organisations in terms of experience and interpretation that transforms information into knowledge. Technology drives change and raises awareness about knowledge sharing. KM tools such as: email; document systems; groupware; the internet; intranet and video conferencing are all knowledge collaboration tools which have been used by organisations for many years. Examples of leading industries already using KM are:
¨ Chevron also uses a Best Practices Map to help find knowledge resources (Dixon 2000)
¨ Earnst Young uses Power Packs, a set of electronic databases comprising of knowledge developed by a team of consultants considered to be expert in their field. This system supports consultants developing proposals and working at a client’s site (Dixon 2000)
¨ Chrysler have also created an ‘Engineering Book of Knowledge’ which holds a set of lessons learned in the design and engineering phases about particular car components (Davenport and Prusak 2000)
Traditional IT systems and applications have tended to be “vertical”
delivering information to specific sub groups within an organisation.
This has created problems for project centric organisations
in that basic information has to be replicated many times across the company by
different systems in different business areas. The result is duplication of
effort and loss of data integrity.
2.4. Knowledge Assets
Measurement systems within organisations are generally focused on financial measures.
For knowledge management initiatives to succeed in acquiring funding and to demonstrate benefits then there has to be an appropriate method of measurement to support justification of the project, which is no different to any other IT project or business investment. Non-financial performance measurement systems such as the Balanced Scorecard and EFQM are used to track the progress of a business. The original Balanced Scorecard was developed by Kaplan and Norton (1992). It is intended to link short-term operational control to the long-term vision and strategy of the business. There are four key perspectives addressed by the Balanced Scorecard with Vision and Strategy being at the core of:
4. Internal business process
5. Learning and growth
The Scorecard compliments knowledge management in that knowledge management initiatives can be conducive to innovation, but it does not measure knowledge. There is no guarantee of a successful strategy by using the Balanced Scorecard. However, the process of building the scorecard is an effective way to express the company’s vision and strategy in tangible terms and to gain support by the business (Olve et al, 2004). This has led to the development of measurement systems which are primarily focused on intellectual capital.
The Skandia Navigator model (1994) includes similar measurement categories to those described in the Balanced Scorecard. However, the ‘human factor’ is central to the other dimensions and links all other areas of concern. The model endeavours to take into account the intangible capital of the business and not just the financial view. The Navigation model supports managers in visualising and developing measures that reflect intangible assets (Skyrme, 1998).
2.5. Getting Started
All organisations create, store, and use information and in larger businesses will have dedicated staff to administer and manage this. People that are already directly involved with information management should be used in the start up of a KM project. Thereby, harnessing their enthusiasm and where possible used as ‘champions’ (Knight and Howes, 2003). The initial steps are to:
¨ Identify the business vision/goals and knowledge objectives
¨ Complete a knowledge assessment by identifying what knowledge processes and systems are already in place. This enables companies to take stock of what is currently in use and where improvements can be made or new processes and or system put in place.
¨ Leverage best practices which have been identified inside and outside the company.
¨ Start small and where it is likely to have an impact and make a difference to the
¨ business. This could be a pilot project from which the business can learn from the outcomes and update the process for the next phase.
¨ Identify and involve knowledge management champions to promote knowledge sharing practices.
¨ The key elements of people, process and technology should be equally resourced in terms of time and money.
¨ Lack of trust, need to encourage a culture of trust and openness. This is especially difficult when the converse has been true in an organisation.
¨ The business is too busy, people have other priorities. It is important to embed knowledge goals into company strategy and project planning so that it becomes acceptable for people to have time and space to reflect and seek out knowledge. Giving people time now will half the time later.
¨ Intolerance for mistakes or asking for help. The organisation culture should allow for mistakes, by accepting and rewarding creative errors and collaboration. Also, there should be no loss of status from not knowing everything.
¨ Do not attempt to implement everything at once. It is a long and iterative process, not a quick fix and the benefits are realised over a period of time.
¨ If knowledge management is to thrive, organisations must create a set of roles and skills to do the work of capturing, distributing and using knowledge.
In summary, implementing knowledge management is about bringing together, people, skills, business processes and technology infrastructure including content management in order to exploit an organisation’s knowledge base (Knight and Howes, 2003).
3. The Research Approach
Most companies are using some form of KM practices and IT tools. The first step in assessing the KM needs of an organisation are to take a ‘snap shot’ of where the business is today in terms of its environment, processes & technology.
Analysis of the business environment included; site visit interviews, on-site project visits, strategic analysis and process analysis. It is important to try and obtain a reasonable business mix, because business units are often at different levels in their use of and understanding of Knowledge management. Interviews should be conducted on-site at each business unit. To ensure the right mix of people, the interviewees selected were involved in the main project stages: Marketing; Operations; Estimating; and Legal. The interview involved discussing such factors as:
¨ What are the company goals/objectives?
¨ What are the strengths and weaknesses of the business?
¨ What external factors can affect the running of the business and projects?
¨ What is the average size of a construction project in terms of cost, resource and timescales?
The interview also focused on the key processes/steps within each project phase; Winning, Design, Construct and Review. The opportunities for capturing and sharing learning experiences were discussed:
¨ How is information currently shared and with whom?
¨ What are the current problems with capturing and sharing information?
¨ What is your ideal vision for sharing of learning experiences?
¨ How can feedback of learning experiences benefit the customer?
Performing the interviews on site at local offices was better than sending questionnaires, because there was the opportunity to meet people and discuss aspects of KM sharing in greater detail. It allowed for spontaneous responses (Oppenheim, 1992) and the opportunity to collect more information (examples) than had been originally considered. Although the interview was not tape recorded, it did not hinder the analysis process. The opportunity to visit project sites was very beneficial because it highlighted the project complexities, especially how the teams involved in the different project stages need to share the same project information as well as having access to past projects.
Strategic analysis techniques were
used to analyse the business environment. These
The SWOT analysis identifies the strengths, weaknesses, opportunities and threats of the organisation as they are today.
“The object of the exercise is to use the strategic pointers in order to use the existing business strengths to exploit opportunities, to counteract threats and repair the weaknesses” (Robson, 1997, p.41)
The assessment of opportunities and threats forms part of an environment scan whilst the assessment of strengths and weaknesses is part of the capability auditing of an organisation.
Porter’s approach is that every market can be studied as a relation between itself, new entrants, buyers, suppliers, competitors and that of substitutes (Porter, 1980). The main objective is to ensure that IS investments are focused on aspects of the business that affect the competitive position directly. Porters Value Chain prompted the outline of the key processes as illustrated in Figure 2 highlighting the primary tasks involved in a construction project.
Critical success factor (CSF) analysis is a business aligning rather than business-impacting technique. CSF was introduced by Rockart (1979) and is a set of factors which can be considered critical to the continued success of an organisation. The focus is on a few areas where things must go right to ensure business success. Avison and Fitzgerald (2002) describe a typical approach as; first analyse the business goals and objectives, then identify the factors critical to achieving each of those objectives.
The final stage is to identify the information systems needed to support and monitor the CSFs. Factors that can influence the definition of CSFs include:
¨ competitive strategy and industry position
¨ environmental factors, such as legal, political, economic and social aspect
¨ factors that take into account the changes in the business environment
¨ monitoring and control procedures relating to the operations of the company
The environmental analysis supported the argument by Egan (1998), such as the importance of people, customers and developing relationships with the supplier. It also highlighted opportunities and weaknesses of working with a limited number of clients. CSF (Rockart, 1979) proved successful because it prompted the definition of group objectives which could then be used to align KM goals (Probst et al, 2001).
Figure 2: Value Chain (Porter, 1980)
4.1. Areas Of Current Knowledge Sharing
The key stages involved in a project from start to finish have been based on the principles of Porters Value Chain model which identifies the primary activities from those which are secondary. These processes focus on a chain of activities which are core to the winning and implementation of a construction project.
Common processes which lend themselves to the sharing of knowledge:
¨ During the tender process information is sought from previous jobs and brainstorm sessions are held with new project team members.
¨ At the design phase there is a project handover meeting between Business Development and the operational team to discuss specific contract/project details. Resource is also mobilised, as well as starting negotiations with key sub contractors.
¨ During the construct phase regular project progress meetings are held as well as safety/toolbox meetings with operatives and team leaders.
¨ At the review phase a project close meeting is held. The different groups of people participating in these meetings vary by business unit and may include; Project Manager, Regional Management, Design, Quality, Business Development and possibly the Customer. Feedback from the meeting is recorded and electronic copies stored.
This approach is similar to that described by Collison and Parcell (2002) where learning processes are embedded before, during and after a project. Research from this study identified that leading Companies are aligning knowledge initiatives to the business goals and that processes are also embedded in routine functions. The overall approach to knowledge sharing is to leverage knowledge by; putting people in touch with people, establishing communities of practice and having access to past experiences.
Initial attempts at implementing KM at Company X focused primarily on the process and technology elements. There was an absence of socialisation where people could meet to share knowledge from other projects. Teams are often temporary and disband at the end of a project before there is time to reflect and capture new information. This highlighted the need for knowledge management to become embedded in daily processes and linked to the business goals. KM tools have been implemented, especially local intranets, email and some form of document management system. A major benefit deriving from the implementation of KM tools is that it raised awareness of knowledge sharing initiatives within the organisation. However, the IT infrastructure is generally non-standard, where regional business units are using local products for project and supplier information.
4.2. Strategic Analysis
The SWOT and
Group business objectives were agreed by the business units as part of the CSF analysis. These objectives focused on critical factors, such as, customer, people, profit, supplier and risk management. This process helped to align the KM goals to the business, which had not been done before.
The group has clearly defined project stages, each with common processes which allow for a degree of knowledge sharing. These are: pre-bid/tender information from previous projects; project handover from business development to the operational team; project kick off; and project close. The capture and way in which information was recorded from these events was non-standard. Project teams were under pressure to complete jobs and move onto the next project, so often there was no time to visit other projects and share experiences.
Each business unit was using a variety of systems ranging from intranet, document management, design tools and project management tools to support the key project processes. A number of these systems are non standard and thus limit the amount of information and the ease at which it can be shared across the group.
4.3. Gap Analysis
There is no core team to capture and promote the sharing of knowledge.
and Parcell (2002) and
Regular project meetings are held at each key stage. There is a willingness to share information, but no time. The business units are not using communities of practice or attending regular KM sharing events.
Probst (et al, 2001) discuss linking KM to business goals so that KM initiatives can be measured. Blake (2004) and Blanch (2004) from TW and Costain respectively have aligned KM to business goals.
Nonaka and Takeuchi (1995) refer to the socialization and externalization of tacit knowledge in order to spiral knowledge throughout the organisation.
Collison and Parcell (2002) refer to processes being kept simple and to introduce learning before, during and after.
KM was not linked to the key business goals. However, Industry standard KPI’s are used by the business units to set and measure objectives. Another business unit was using balanced scorecard.
Business units are recording project information but there is no clear procedure for the sharing and capturing of tacit knowledge.
Project stages are clearly defined and are consistent across business units. Meetings are embedded in the processes, allowing for the sharing of project experiences before (winning), during (mobilise & construct) and after (review) stages. Information is captured and stored in a non standard format.
Collison and Parcell (2002) and
Blake (2004) and Blanch (2004) discuss ways in which tacit knowledge can be externalised and shared by using communities of practice and a knowledge repository to capture lessons learned.
Collison and Parcell (2002) and
Union Square Software (2003) discusses the use of
collaborative tools by way of an enterprise portal.
Skyrme (1999) and knight and Howe (2003)
Refer KM tools as:
1. Discovery – data and text mining
2. Collect and codify using search engines
and intelligent agents
3. Presentation using a knowledge
repository with databases and document management systems including data warehousing.
4. Collaboration tools, such as, groupware and video conferencing.
Information classifications using taxonomies and meta data are used for documents and databases. Ontopia (2004) refer to topic maps which allows topics to have the same name, linking roles, products and procedures to the corresponding documentation.
The implementation of a group intranet is helping to standardise the platform used for local intranets. Estimating and Design are using standard tools. However, project information is captured using a number of non-standard systems.
Not using communities of practice to capture knowledge. Lessons learned are captured in an ad-hoc way at the close-out meeting. There is no group knowledge repository.
Knowledge maps are not used. The intranet provides a ‘yellow pages’ of who’s who. However, this is dependent on uploading information from local directories used by the business units which are using non standard technology.
Business units are not using enterprise portals or Groupware as collaboration tools.
The group intranet uses a search engine for finding people and library photograph information. Document management systems are used for standard forms and some project information.
As discussed above there is no knowledge repository or groupware in use.
Information classifications are used for the group intranet. There is no group standard for the business units when setting up local databases.
The literature review highlighted common themes such as: KM alignment to the business goals; people and processes; technology and measuring the benefits and value of knowledge. Company X initial attempts at implementing KM focused primarily on technology and processes. Weaknesses were identified with these, in terms of non standard information systems and procedures for recording project close meetings. However, the implementation of the group and local intranets with a peoples’ directory and some project history helped to raise awareness about knowledge sharing within the group.
A summary of the Gap Analysis for Company X is shown in Table 1. Important gaps included:
¨ There were no core team (champions) to promote the capture and sharing of knowledge.
¨ The business was not using communities practice and there was no clear procedure for the sharing and capturing (socialisation and externalisation) of tacit knowledge.
¨ There was no group knowledge repository, knowledge maps or groupware in use. This led to frustration when trying to source information quickly and easily.
¨ Project meetings are recorded in a non-standard way. Project information is maintained using different local systems and is non-consistent across the group.
¨ Local ‘people’ directories are in use, but not fully utilised.
To address the key points highlighted in the gap analysis it was necessary to re-balance all three key elements of knowledge management, as well as aligning KM initiatives to the business goals. This would then allow Company X to start assessing the benefits of implementing Knowledge Management.
5.1. People & Process
¨ Introduce communities of practice and encourage project teams to visit similar projects, thereby, starting the socialization of tacit knowledge.
¨ Create a core KM team to champion the cause of knowledge sharing and to help with the capture and codification of lessons learned. This will promote the use of the ‘peoples’ directory and the best way to capture project close out information.
¨ Leverage best practice of one business unit and introduce Balanced Scorecard as a standard performance measurement tool to use in conjunction with KPI’s.
¨ Standardise information systems by: investigating current project and supplier information systems and introduce a standard solution for each; introduce information classifications for project and supplier information; and topic maps for codifying lessons learned.
¨ Set up knowledge repository comprising: project and supplier information; lessons learned; and pre-bid material. Investigate the use of ‘enterprise portals’ to support this process. This will encourage the sharing of innovative ideas and limit the re-inventing of the wheel syndrome.
¨ Implement powerful search engine, such as Autonomy and standard groupware, such as, Lotus Notes for the group which will promote and simplify the sharing of information, across the group.
¨ Create a knowledge Map of all the key people skills in group.
The investigation of standard technologies can be performed while the people and process recommendations are implemented. This will ensure the balance of the key KM elements.
“The linking of technologies with the unique skills and experience of individual workers seems to be the source of the energy that drives knowledge management forward.” (Probst et al, 2001 p.291).
The approach outlined in this paper to assess and implement KM can be applied to any business sector. Particularly where businesses operate within a project environment and where project teams are constantly on the move. The implementation of KM is no different to that of an IT or business change project and should be aligned to the business goals to ensure greater implementation success and delivery of business benefits.
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Meet the Authors:
Helen Gillingham is an IT Project Manager
experienced in strategic and business analysis in multi-national and government
organisations in Europe and
Bob Roberts is a Reader in E-business at