Knowledge management in the construction context

Management of knowledge has become important in business in the last few decades since business’ emphasis has moved from a resource based to a knowledge based business environment, the knowledge economy, which is based on knowledge workers (Drucker, 2001, Egbu and Botterill, 2001). Although the economic value of knowledge has been discussed for centuries, only in the mid 1990s was there a ‘boom’ of activity in knowledge management in the form of publications, conferences, or consultancies (Quintas, 2005). According to Quintas (2005) there are a few drivers that accelerated growth of knowledge management, for instance wealth generated from knowledge, realisation of people as the core in organisational knowledge, change of market, recognition of innovation as essential to competitiveness, and the limitation of technology. Knowledge management is a vital requirement for innovative organisations, which with knowledge management it enables knowledge in an organisation to be exploited and to have competitive advantages (Egbu et al., 2001).

One of the construction industry’s characteristics is low profit margins. As the Egan report (1998) shows, it is one of the reasons for under-performance in the construction industry. Productivity is the key to overcoming the low level of margin in the industry. As Pathirage (2007) argued, knowledge management has become vital in the construction industry, since the industry is exploring ways to increase the efficiency, “finding new ways of doing things” (Pathirage, 2007). Also in order to fulfil clients’ demand, construction organisations should improve on past solutions, innovate, and manage change, by producing new knowledge (Egbu et al., 2003b).

Fong (2008) argues that a project may be seen from two perspective. First, as a management view where the project is seen as the management of deployment of resources, including plant, people, and materials. The second view is that the project may be viewed from the knowledge perspective where the projects create and acquire knowledge from one project to the next.

A similar view is held by Egbu and Robinson (2005), who point out that the construction industry is a knowledge-based industry, although the industry is

47

commonly known for its products: buildings, roads, bridges, dams and monuments. They argue that the construction industry provides services to its clients and customers, and the industry may be rightly labelled as a knowledge- intensive industry which depends on professional knowledge or expertise. Egbu and Robinson (2005) gave an example of the construction of a new modern office complex, in which 70% of production costs can be associated to knowledge- based elements.

The construction industry is considered as an important sector in a country’s economy, as the industry employs millions of people and contributes significantly to GDP. The industry is dominated by small and medium enterprises and with small numbers of large companies. In the UK, small and medium enterprises (SMEs) account for over 90% of all organisations (Egbu and Robinson, 2005), in Indonesia, the proportion of SMEs is greater and large enterprises only account for 1% of all organisations (Suraji and Krisnandar, 2008).

For construction projects, Robinson et al. (2005) argue there is a need to classify knowledge of an organisation based on the business context: product, process and people. They show the distinction by considering the end product of construction projects, e.g. standard construction, traditional construction and innovative construction. These three end products need a mix of tacit and explicit knowledge, where innovative construction requires more tacit than explicit knowledge.

Based on Nonaka and Takeuchi’s (1995) theory of knowledge creation, the SECI model, knowledge production in a construction project can be considered in four modes (Socialisation, Externalisation, Combination, and Internalisation) through interaction of individuals and organisations from the beginning of the project to the handing over of the completed project. The socialisation process transforms tacit knowledge into explicit knowledge. Trainee workers learn skills from their mentors through observation, imitation and practise (Egbu and Robinson, 2005). Reading manuals, textbooks or standards, then interpreting those documents to develop an internal mental model and is an example of the internalisation process which converts explicit knowledge into

48

tacit knowledge. The opposite process, externalisation, is the process to convert tacit into explicit knowledge. An example of externalisation in construction is the drawing from the designer, which explains the designer’s concept. Explicit to explicit knowledge interaction takes place through a process called combination. Individuals and project teams create knowledge through integrating and processing of various project documents.

However, the nature of the construction industry does not provide effective knowledge well (Graham and Thomas, 2005). According to the authors, the nature of the complex and disparate industry, with poor relationships, and employee migration of the industry contribute to ineffective KM. There are some characteristics that also contribute to it: one-off project teams, non- repetitive nature of works, pressure to complete and lack of incentives to appraise performance, all contribute to ineffective KM.

By assessing empirical works on knowledge management in the construction industry, Pathirage et al. (2007) highlight the people factor and their tacit knowledge is more important than the explicit knowledge. Tacit knowledge in the form of skills, experience and talent are considered to be valuable towards organisational performance due to the intrinsic characteristics of the construction industry (Pathirage et al., 2007) which are of a short-term, temporary, and project based nature (Green et al., 2004).