MASTER OF BUSINESS ADMINISTRATION
INTERNATIONAL MANAGEMENT
MANAGEMENT REPORT

KNOWLEDGE MANAGEMENT AS A KEY FACTOR
IN PROJECT PERFORMANCE

A STUDY OF A HIGH-SPEED TRAIN PROJECT AT XXX

von

FATMA TORUN 

UNIVERSITY OF EAST LONDON
AST LONDON BUSINESS SCHOOL

SEPTEMBER 2004 

ABSTRACT

Most organisations are aware that in today’s highly competitive environment managing effectively their knowledge is the only way to achieve a sustainable competitive advantage. One of the primary areas to which knowledge management can be applied is the field of project management. An increasing number of business sectors are adopting a project approach to carry out a range of essential activities where valuable knowledge is gained. Knowledge from projects is an important resource for further projects, because projects solve innovative and interdisciplinary tasks. However, the majority of organisations do not manage the information gained through past projects. Failure to transfer knowledge from past to future projects leads to wasted activity and unnecessary expenses by ‘reinventing the wheel’. Therefore, knowledge management is a critical success factor for many projects.

The purpose of this Management Report is to approach knowledge management from the perspective of project management. The main objective is to define how knowledge management can be enhanced within a project by analysing suitable tools and relevant theories. The research is based on the high-speed train project XY of the company XXX. This project is an important milestone for XXX to improve its market position in Spain. The knowledge gained through the XY project will be the key factor for the success of the further high-speed train projects.

The main finding of the case study highlights that there is a lack of formal knowledge management activities at the project. The project team focuses mainly on personal interaction for transferring knowledge and information technology is not used to its full potential. A hybrid approach to knowledge management for project environments is suggested, taking into account technical as well as human-specific aspects. The main recommendation is to determine a knowledge management strategy, which preferably focuses on transferring tacit knowledge and gives information technology a support function. Other areas of improvement are creating an open and constructive project culture, including knowledge initiatives in reward systems and fostering documented project review sessions. Finally, general conclusions are provided to answer the main research question of this management report.

TABLE OF CONTENTS

TABLE OF APPENDICES ... iv
TABLE OF FIGURES ... v
ABBREVIATIONS ... vi

I. INTRODUCTION  ... 1
1.1 Background ... 1
1.2 Definition of the Problem  ... 2
1.3 Objectives and Research Questions ... 3
1.4 Scope and Limitations  ... 5
1.5 Structure of the Report ... 5

II. THEORETICAL FRAMEWORK ... 7
2.1 Knowledge Management  ... 7
2.2 Information versus Knowledge ... 9
2.3 Classifications of Knowledge  ... 10
2.3.1 Tacit and Explicit Knowledge ... 11
2.3.2 Individual and Collective Knowledge ... 12
2.4 Knowledge Creation and Transfer ... 13
2.4.1 Four Modes of Knowledge Creation and Transfer ... 13
2.4.2 The Concept of Ba ... 16
2.5 Knowledge Management at Project-Specific Environments  ... 17
2.5.1 The Project Management Processes ... 17
2.5.2 Definition of Project Performance  ... 18
2.5.3 Knowledge at Projects  ... 19
2.6 Tools of Knowledge Creation and Transfer ... 20
2.6.1 The Importance of Organisational Structures  ... 21
2.6.1.1 Organisational Culture ... 22
2.6.1.2 Reward Systems ... 23
2.6.1.3 Management Support ... 23
2.6.2 Communication ... 24
2.6.3 Lessons Learned  ... 25
2.6.4 Mentoring and Social Networks  ... 26
2.6.5 Information Technology ... 27
2.7 Summary and Discussion ... 28

III. APPLICATION: THE PROJECT XY  ... 30
3.1 The Case Study Project XY  ... 30
3.2 Knowledge Management Project at XY  ... 32

IV. EMPIRICAL FINDINGS AND ANALYSIS ... 34
4.1 Current Knowledge Management Practices ... 35
4.2 Organisational Structures ... 37
4.2.1 Organisational Culture ... 37
4.2.2 Reward Systems  ... 40
4.3 Communication ... 42
4.4 Mentoring Programmes and Social Networks  ... 46
4.5 Information Technology  ... 48
4.6 Analysis of the Four Modes ... 50
4.7 Summary and Discussion of Analysis  ... 52

V. RECOMMENDATIONS ... 53
5.1 Identification of Knowledge Management Strategy ... 53
5.2 Information Technology as Support Function  ... 54
5.3 The Importance of Project Structures  ... 54
5.3.1 Project Culture  ... 55
5.3.2 Team Diversity ... 55
5.3.3 Reward Systems  ... 56
5.4 Communication ... 57
5.5 Summary of Recommendations ... 58

VI. CONCLUSIONS AND FURTHER RESEARCH ... 59

VII. BIBLIOGRAPHY ... 61

TABLE OF APPENDICES
Appendix I: Spain’s Infrastructure Plan of Transportation ... 68
Appendix II: Methodology  ... 69
Appendix III: Interview Guide ... 71

TABLE OF FIGURES
Figure 1: Research Questions  ... 4
Figure 2: Structure of the Report  ... 6
Figure 3: Information versus Knowledge  ... 10
Figure 4: Knowledge Conversion Model ... 15
Figure 5: Project Management Processes  ... 17
Figure 6: Keywords and Tools ... 21
Figure 7: Fact Sheet of XY  ... 31
Figure 8: Key Questions for Lessons Learned Session  ... 57

ABBREVIATIONS
AG Aktiengesellschaft (German: Public Limited Company)
AVE Alta Velocidad Española (Spanish High-Speed)
E España
e.g. exempli gratia (Latin: for example)
IBM International Business Machines
ICE InterCityExpress (High-speed train in Germany)
i.e. id est (Latin: that is)
kph kilometres per hour
PIT Plan Infraestructure Transporte (Infrastructure Plan of Transportation)
RENFE Red Nacional de los Ferrocarriles Españoles (National Spanish Railway Network)
S.A. Sociedad Anónima (Spanish: Public Limited Company)
SECI Model: Socialisation, Externalisation, Combination, Internalisation

“In an economy where the only certainty is uncertainty,
the one sure source of lasting competitive advantage 
is knowledge” 

(Nonaka, 1991, p. 546).

I. INTRODUCTION

The aim of this section is to provide background information about the researched area. In the beginning, the concept of knowledge as a key to sustainable competitive advantage will be examined. This is followed by the problem discussion and some of the obstacles related to knowledge transfer between projects. Further on, the objectives and research questions will be presented. As a final note of this section, the limitations and the structure of the report will be introduced.

1.1 Background

Over the past several years there have been intensive discussions about the importance of managing knowledge within organisations (Davenport et al., 1998).
Most organisations are aware that in today’s highly competitive environment managing their knowledge effectively is the only way to achieve sustainable competitive advantage (Drucker, 2001). To achieve this advantage, the ability to create, capture, transfer (share) and apply knowledge is essential (Davenport and Prusak, 1998).

One of the primary areas to which this knowledge management approach could be applied the field of project management.
In recent years the number of tasks and the amount of work within a company, which are managed in projects, is growing immensely (Disterer, 2002). This trend is increasing because key characteristics of project organisations address success factors of companies: high flexibility, interdisciplinary work, and promoting innovation (Katzy et al., 2000). An increasing number of organisations at different business sectors are adopting a project approach to carry out a range of vital operational and innovative activities, and the influence of project-based activities on overall company performance keeps intensifying. Consequently, the significance of excellent performance in the management of projects is also increasing.

Demanding environmental pressures, uncertainty, shrinking time for projects, decreasing time to market for project results and high quality requirements are influencing the ability of organisation to perform successful project management (Disterer, 2002). Therefore, gained knowledge from projects is an important resource for following projects because projects solve innovative and interdisciplinary tasks.

1.2 Definition of the Problem

Most organisations are running projects where valuable knowledge is gained, including success and failures, lessons learned and best practices. However, the majority of organisations do not capture, manage or use the information they gain through their projects. Another related problem is the fact, that most project managers do not explicitly budget for resources to perform knowledge transfers (Alderman et al., 2001). 

What occurs to knowledge gained after the completion of a project and at the beginning of the next project? Learning from the past is how things should work, but it rarely happens. Failure to transfer gained knowledge from former projects to future projects leads to wasted ‘reinventing the wheel’ activities. Thee organisations incur new expenses as they search for similar solutions and repeat mistakes of past problems (Tiwana, 1999). Therefore, an important concern is how to generate knowledge for a given project in a way that makes it available not only during the project and to other projects, but also to future projects (Katzy et al., 2000).

In contrast, there exist various challenges for knowledge transfer in project environment. Significant barriers include the dissolving of a project team, lack of formal management support, an inadequate project culture and essentially the reluctance of employees for knowledge sharing.
The discussion about the importance of knowledge in projects has become of interest since there has been an increase of project approaches at organisations. However, very little published research deals directly with the issue of knowledge management at projects.

Furthermore, traditional project management literature still offers a limited view of knowledge and knowledge management. But this view is understandable considering certain differences between project management and knowledge management. First, projects are by nature finite endeavours, whereas knowledge is a resource that should stay around as long it is useable, typically far beyond the life of a single project (Katzy et al., 2000). Second, project management is goal oriented and happens in spite of potential differences in culture, whether it is at the level of project teams, organisations, or even national entities (Katzy et al., 2000). Moreover, projects also create their own distinct team and culture. Knowledge management, on the other hand, is not necessarily an end itself. Knowledge is generated and shared as project activities occur where the sociocultural context has an important influence on this process (Leseure and Brookes, 2004).

In conclusion, this report adopts the viewpoint that knowledge management is a fundamental basis of project management. Projects create the necessity to manage knowledge across time and in a multi-context setting, because knowledge has proven to be one of the most critical enablers within a project. Therefore, project knowledge should be captured and retained so that other projects can retrieve and apply the knowledge to future tasks. Companies not securing systematically knowledge gained in projects for later usage, risk to reinvent solutions, repeat mistakes and incur unnecessary expense to relearn the same lessons (Tiwana, 1999).

1.3 Objectives and Research Questions

At this report knowledge management will be approached from the perspective of project management. The main objective is to define how knowledge management within a project can be enhanced by

• analysing suitable tools of effective knowledge management from relevant theories and
• creating a framework to enable and support a transfer of knowledge across project frontiers.

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