An Empirical Study of the Relationship between Ict-based Knowledge Management and Project Performance in Malaysian Construction Consulting Companies

The objective of this study is to examine the relationship between ICT-based knowledge management (KM) roject performance in the construction consulting companies. There will be two phases of survey. The first phase will be the quantitative approach where one hundred and twenty two practitioners from the Malaysian construction consulting companies will be selected to form the sampling frame. The second phase is the qualitative approach where five expert’s practitioners will be selected for detail interview and observation. AMOS which provides a structural equation modeling will be used to provide statistical support to indicate there is a positive relationship between ICT-based KM and Project Performance. The result shall provide the empirical evidence that ICTbased KM may improve project performance in the construction consulting companies. The study will also produce a framework as a guideline for the effective implementation of KM in improving project performance. Keyword: Knowledge Management, Construction Management, IT Management Introduction Overview Throughout the last two decades, a considerable amount of research has been focused on identifying important factors that affect construction project performance (PP). Most construction projects are large, extensive, expensive, and are subjected to tight schedule and budget (Chao,2001). Many of construction projects fail due to the incompletion, over budget and late. Report of the Construction Industry Cost Effectiveness (1985) has reported that ninety percent of construction projects were incomplete, over budget and late. Ward et al. (1991) describe how when assessing the success/failure of construction projects ‘a common approach is to evaluate performance on the extent to which client objectives like cost, time and quality were achieved’. Indeed, those are seen as the ‘three traditional indicators of performance’ (Mohsini and Davidson, 1992) used in the UK construction industry. To date, however, researchers have not reached a consensus on the critical factors that influence project achievement with respect to performance measure (Beamon, 1999). Furthermore, in the new construction era, a construction project is more unique, complex and custom-built to fulfill customer’s requirement. The construction projects are influenced by many variables and sometime unpredictable factors. Rapid changes in the market, technology changes and advancement and competitive trends are significantly affects the construction industry. In a rapid changing environment, one of the major sources of sustaining competitive advantage is knowledge (Nonaka and Taguechi, 1005). Thus, knowledge management (KM) is a critical success factor to support the project performance. KM includes the process of discovery, creation, development, dissemination, utilization and preservation of knowledge. In ensuring the success of KM, numerous studies have identified that information technology infrastructure (ITI) is one of the critical factors for effective KM (Junnarkar and Brown, 1997; Trussler, 1997; Ruggles, 1998; Syed, 1998, Skyme, 1999, Sarvary, 1999, Zack 1999, Choi, 2000; Kim, 2001, Rasli, Abdul Majid and Asmi, 2004). In a current research done on Project performance, it has been highlighted that new skills, mind-sets, models and commitment as well as new ways of interpreting the concept of effective management are needed to improve construction project performance. The study has derived a model of KM, ITI and PP to create effective management to improve project performance (Rasli, Abdul Majid and Asmi, 2004). A matrix which identifies significant differences among the two types of KM (exploitive and explorative), the two types of ITI capability (standardised and exclusive) and also the two types of project performance (normal project performance and high project performance) among participants in the Malaysian construction consulting companies has been derived as a guidelines for implementation of KM, ITI which relates to PP (Rasli, Abdul Majid and Asmi, 2004). However, no clear relationship between KM, ITI and PP has been proved in the research. Research Objective The purpose of this research is to examine the relationship between KM, ITI and PP. The framework provides practitioners a guideline for implementation of KM supported by ITI to improve project performance. Moreover, this framework is intended to stimulate further development in KM, ITI and PP field. Toward this end, this research involves three steps: (1) Development of a conceptual framework for the assessment of KM, ITI and PP approaches in the management consulting industry; (2) Presentation of the research model on the relationship between KM, ITI and PP leading to formulating hypotheses; and (3) Based on the field survey, the relationship between KM, ITI and PP is measured and tested. Research Question Studies show that organizations adopt specific approaches to KM (March, 1991, Jordan and Jones, 1997; Hensen et.al., 1999; Zack, 1999, Sarvary, 1999) and ITI (Junnarkar, 1997; Syed, 1998, Skyrme, 1999; Choi, 2000). To maximize the benefits of KM and ITI in ensuring the project performance, the critical relationship must be identified. Then, the research question can be stated as follows: What are critical relationships between KM, ITI and PP, especially in the construction consulting industry? Literature Review The literature reviews consists of three sections. The first section presents a literature review on PP. The second section presents a literature review on KM while the third section presents a literature review on ITI. Project Performance After a long dependence on financial measures, performance matrix promoted the classification of performance measures into cost and noncost measures (Keegan et al.’s, 1989), and promoted the use of performance measures based on world-class manufacturing (WCM) which measures quality, time, process, and flexibility (Maskell, 1989). Dixon et al., 1990 devised the performance measurement questionnaire (PMQ) when they recognized the need for performance systems to identify areas of improvement and work on developing them. Azzone et al. (1991) promoted the importance of the time criteria in their matrix for time-based companies. Kaplan and Norton’s (1992, 1993) founded a new concept to performance measurement frameworks with four broad perspectives: financial, customer, internal processes, and innovation. The framework was further improved as a strategic management system by Kaplan and Norton 1996 (2001), Sinclair and Zairi (1995), Flapper et al. (1996) and Bititci et al. (1997). Neely and Adams (2001), however, focus first on measuring stakeholders’ needs and contributions and then on the required strategies, processes, and capabilities. A lot more of Performance measurement frameworks exist, other than those mentioned, that are sometimes national in nature. Summary of Findings Based on the literature review, the main performance measures are mainly cost, time and quality. Though there are a lot of new measurement factors for project performance, all of them may fall under any one of these measurement factors by looking from different view as holistic view of performance measurement. Knowledge Management Definition of Knowledge Management Defined There are several definitions of KM. The definitions are based on the authors interpretations (Choi, 2000), perception and significance. The following definitions illustrate the different perception and interpretation of KM. “KM is the mechanism for building the institutional memory of the firm to better apply, share, and manage knowledge across various components in the organization” (Choo, 1998) “KM is a strategy that turns an organization’s intellectual assets – both recorded information and the talents of its members into greater productivity, new value and increased competitiveness; it teaches corporation from managers to employees, how to produce and optimize skills as a collective entity” (Murray, 1998) “KM is the explicit and systematic management of vital knowledge and its associated process of creating, gathering, organizing, diffusion, use and exploitation. It requires turning personal knowledge into corporate knowledge that can be widely shared throughout an organizational and appropriately applied” (Skyrme, 1997) “Knowledge management is the systematic, explicit, and deliberate building renewal and application of knowledge to maximize an enterprise’s knowledge related effectiveness and returns from its knowledge assets “ (Wiig 1997) Knowledge Management Framework There are several KM framework proposed such as Knowledge Landscape Framework which highlighted the organizational environment elements which contributes to KM as illustrated in Figure 4 (Siemers and Arc Partners, 2000). Other KM framework are the Knowledge Flow Framework (Newman and Conrad, 1999) as shown in Figure 5. Figure 4. Knowledge Landscape (Siemers and Arc Partners, 2000). Figure 5: Knowledge Flow (Newman and Conrad, 1999) Other significant KM framework proposed by Dr Micheal A. Stankosky, Associate Professor of Engineering Management at Georgia Washington University is the ‘Four Pillars of KM” (Figure 6) and validated by Calebrese (Calebrese, 2000). Figure 6 – Four Pillars of KM (Baldanza and Stankosky, 1999) Knowledge Management in Construction Consulting Industry Construction consulting industries are basically selling and managing knowledge, skill and experience. Recent studies on KM strategies in management consulting industry found that there are several approaches in KM practices. Basically there are two type of KM approaches; centralized and decentralized (Sarvary, 1999, Hansen, Hohria and Tierney, 1999). Another research finding on the KM implementation in construction consulting industry is the matrix between KM, IT and Project Performance (Rasli, Abdul Majid and Asmi, 2004). The matrix can be a guideline to integrate the IT and KM to maximize the project performance based on the types of services given by the company. Based on the literature review, KM can be defined as a systematic and strategic approach of managing knowledge through KM cycle starting from discovery until recreation of new knowledge to maximize the benefits of the corporate knowledge. IT Infrastructure to Support Knowledge Management IT has been recognized as an important supporting element or enabler to successful KM (O’Dell and Grayson, 1998; Weil and Broadbent, 1998; Skyrme, 1999; Choi, 2000 ). Technology advancement in IT creates opportunity to manage knowledge efficiently and effectively. Data Mining and Data Warehousing tools manage, manipulate and analyze data to transform to knowledge is part of knowledge management tools available today in the market (Chase 1997; Skyrme, 1999). The other analysis tools such as OLAP (Online Analytical Processing), DSS and EIS tools facilitate the knowledge management activities. Currently the advancement in internet, portal and web application and services create opportunity to disseminate and transfer knowledge efficiently and fast (O’Dell and Grayson, 1998). The relationship between IT and KM known IT-Knowledge Value Chain is proposed by Skyrme. Rasli, Abdul Majid and Asmi (2004) proposed that IT should be exclusive and standardized. Exclusive IT infrastructure capability is reflecting the specialized and more advanced IT capability and standardized IT infrastructure capability is reflecting the general or generic IT infrastructure to support the KM activities. Based on the literature review, IT infrastructure capability can be defined as elements in IT infrastructure which are important to support and facilitate the Knowledge Management activities. Research Design Research Framework The research framework is extended from research done by Rasli, Abdul Majid and Asmi (2004) by deriving the critical relationship between KM, ITI and PP and incorporating additional success factors which are experience and education for improving the project performance. The new framework is illustrated in Figure 7. Figure 7 – Framework of the Relationship between KM, IT and PP Variables In this research there are three types of variables. The first is an independent variable which is Project Performance, second is a dependent variable which is Knowledge Management and third is the mediator which is IT infrastructure capability. Hypotheses In this research, there are 10 hypotheses. Basically the hypotheses stated that there are positive relationship between KM and Project Performance when IT infrastructures are utilized appropriately as a mediator between KM and Project Performance. H1: Consulting Companies whose KM was supported by exclusive Data Management Capability of IT infrastructure showed a higher Project Performance versus companies whose KM was supported by standardized Data Management Capacity. H2: Consulting Companies whose KM was supported by exclusive Integration Capability of IT infrastructure showed a higher Project Performance versus companies whose KM was supported by standardized Integration Capability. H3: Consulting Companies whose KM was supported by exclusive Collaboration Capability of IT infrastructure showed a higher Project Performance versus companies whose KM was supported by standardized Collaboration Capability. ICT Based KM Model (Supported by Exclusive ITI) Data Management Capability Integration Capability Collaboration Capability