Measuring and demonstrating the value of KM

Fulfiling the promise of knowledge management at Fluor Corporation. By Rob E.V. Koene

Fluor Corporation is one of the world’s largest, publicly owned engineering, procurement, construction and maintenance (EPC&M) services companies. The company is ranked in the top three of ‘The Top Design-Build Firms’ and ‘The Top 400 Contractors’ lists, which are compiled by Engineering News-Record (ENR) magazine. Employing more than 30,000 employees worldwide, the company has worked on many of the world’s most successful and demanding projects, and is widely regarded as one of the safest contractors.

Why KM at Fluor?
A project manager for a natural gas project in South Africa had a question about the next step in his project – he had some doubts about specifications given by the vendor on a piece of equipment and did not want to proceed without being sure. The issue was a showstopper. He didn’t know the answer, and had to resolve the concern urgently in order to proceed with the project. Before he left the office for the day, he posted an urgent question to the knowledge community for help.

By the time he got to work the following morning, he had four replies from around the world. The responses confirmed that with a slight modification, his project could proceed.

This type of project problem solving occurs every day at Fluor. “This is not the first time I have had to resort to using the discussion forums to solve a problem,” said the project manager. “I have found our knowledge-management (KM) tool and processes indispensable. When I first heard about knowledge management, I had my doubts whether it would work. Today, I have my doubts whether I could work without it.”

With projects all over the globe – many in remote locations – sharing knowledge on a global basis is essential to Fluor’s success. In the face of increased international competition and to remain cost-competitive, the company has to perform increasing levels of work overseas in places such as New Delhi and Manila. The ability to share engineering services around the world helps the company to maintain around-the-clock effort and shorten time-to-market schedules. Fluor’s KM strategy helps the company achieve business objectives by connecting people to people and solutions to challenges.

In 1999, to support Fluor’s vision to be the premier provider of global, knowledge-based EPCM services, the company began its KM journey. The corporation recognised that its employees formed the core of its knowledge-based services, and that a better ability to link these employees in meaningful communities would not only allow them to access and share their collective knowledge, but would ultimately improve customer service. The company had been “managing knowledge” for a long time, and pockets of the organisation were leveraging and sharing what they knew within their discipline in one office, but rarely on a global scale.

With employees as the core of Fluor’s intellectual assets and knowledge-based services strategy, employee buy-in and participation are critical to the company’s ability to grow. The ability to capture, share, leverage and improve what employees know in a global environment is a key differentiating factor. Fluor, like most organisations, is also faced with the challenges of an aging workforce, as well as a growing number of jobs being work-shared (supported by global offices) overseas. Both require ways to collect knowledge and share it before it walks out the door.

How did Fluor motivate employees while experiencing this flux in global employment? By communicating the benefit to employees – leverage knowledge, and make yourself more valuable to the corporation. A good colleague has always been someone that is ready to help and has a positive attitude.

A knowledge management system just lets someone do that even better!

To help explain and teach the concepts of collaboration, Fluor adopted the following principles of knowledge sharing:

Knowledge is an intangible asset;
Knowledge management is 90 per cent connecting people, 10 per cent tool;
We will actively encourage our members to collaborate;
New knowledge is generated through sharing;
Knowledge must be sustained through stewardship;
Knowledge is shared across boundaries;
Make the system accessible from any location (via the intranet or via secure internet links).

Why knowledge management at Fluor?

Enhance skill sets of all members;
Leverage knowledge anytime, anyplace;
Grow beyond internal capabilities;
Provide optimal solutions for our customers;
Improve overall business performance;
Apply what we know to current and new markets;
More effectively leverage our subject matter experts;
Deliver value.

Where we are now
Employees in every office, business unit and discipline use the company’s KM tool, Knowledge OnLine, as a resource to help them perform optimally. Effective knowledge management derives the most from employees, intellectual property, suppliers, partners and customers. Having one enterprise solution puts employees on a common foundation for collaborative working and knowledge sharing, allowing the best ideas and people to shine.

However, the science of knowledge management is still young in terms of practice, culture and supporting technology. At Fluor, we see new opportunities to continue to reduce the cost of knowledge management and increase the value by making future investments in Knowledge OnLine.

The largest cost associated with a knowledge management programme is the maintenance of existing content and development of new resources. On an ongoing basis, Fluor undertakes the elimination, integration and migration of old knowledge stores to Knowledge OnLine. The company believes that the context of knowledge (how, when and where to apply it) and association of experts is critical, but the actual content can often be supported and maintained by partners. For example, most Fluor projects involve equipment supplied by hundreds of different vendors. The vendors already have a large amount of knowledge about the equipment they manufacture, which is available on the internet. The tool should be able to easily combine and retrieve Fluor’s expertise about how to properly design, engineer, construct and operate facilities, taking into account the knowledge maintained on the internet about the components that make up those facilities.

Another good example is the accessibility of all Quality Assurance (QA) documents, which enable staff to access the finer details of Fluor’s work methods and QA.

Fluor’s aim is to continue to raise the level of KM performance by encouraging knowledge innovation, work process improvement and strategic alignment of intellectual assets. The system will continue to evolve because new technologies will enable dynamic matching of the task context with solutions that more closely mimic how people interact with experts. This process will help accelerate and support the development of people into experts and better leverage their expertise.

Fluor’s ability to access and share knowledge on a global, enterprise wide, real-time basis allows us to reap many benefits. Although the value is recognised internally and by our customers, it’s clear there remains potential for even greater benefits. As time progresses, the company refines its knowledge management strategy to align with current business goals. Success stories from all over the world and across business units are received daily and they continue to demonstrate the power of people connecting globally.

One of the success factors of Fluor’s KM system is that it is people driven (not IT nor HR) and comes with an easy to use user interface. It includes a standard template for entering new knowledge and asking forum questions. The system also incorporates a powerful enterprise-search engine.

Creating value
Fluor’s KM programme is valuable because it creates internal and external value, saving costs and resulting in better relationships with customers. In addition, the company places much emphasis on being a learning organisation. Knowledge OnLine is an effective system for training new hires, while people on job rotation can quickly find the education they need when they need it. The benefits of a KM system, in this instance, far outweigh the costs.

Of course, the other value creating aspect is that created for Fluor’s customers. While an elusive measurement since it relies totally on the feedback of engineers, this is the Holy Grail of any KM system. At Fluor, KM translates into huge cost savings with respect to early start-up (thus early production), lower project cost, fast resolution of problems, innovative solutions, etc.

Developing an effective KM programme requires real commitment to collaborative working practices. Today, there are 40 active communities with over 14,000 members in over 100 locations, conducting 3,500 searches each day, 500 downloads of knowledge objects daily, 250 new or updated knowledge objects each week, 150 questions and answers each week in the forums and 7,500 forum reads each week. The majority of these ‘members’ are engineers, designers and buyers. These are the people that create the value via their participation – asking questions, giving expert answers and submitting knowledge.

The trend is towards a culture where the amount of knowledge is increasing at a slower pace, while the number of forum questions is increasing. This phenomenon may be a sign of a maturing system where questions are asked about actual knowledge gaps or new developments. This is where Fluor’s Global Experts play a major role in getting timely answers.

But there is no such thing as a free lunch. All knowledge management systems come at a cost, and Fluor’s consist of:

Knowledge managers for the communities of practice;
A small, centralised KM team focused on tool maintenance and development, community development and communications.

Internal value
In large part, the internal value is the money NOT spent by not having to invent the wheel several times and being able to connect members to experts worldwide. This value is derived, in part, from usage statistics, the digital footprints all users leave, for which Fluor has a robust tracking system.

These statistics are imported in a ‘mathematical’ model, a spreadsheet that links pre-determined categories of usage numbers to weighing factors such as hours per unit. The resulting number is then multiplied by a unit cost. This is the gross saving, which is then deducted from the management costs involved. This results in a net total savings. In Fluor’s case, these net savings exceed the cost by a factor of at least 20, which makes the system highly viable from an internal saving point of view.

Another factor that adds to the complexity and sometimes unexpected high (or low) numbers is the method of usage. Projects that are starting will have a hugely different usage pattern than projects in steady state or in their final stages. Fluor maintains a regular end-of-year review of the used weighing factors, making any necessary adjustments accordingly.

The main advantage of this approach is that a trend can easily be detected and that members can actually see a number, which is very powerful. The major disadvantage is that it cannot be presented in an attractive “story” format, which most people relate well to.

As engineers, we love numbers, but they can also be a pitfall. The tendency is to crunch and slice and dice all available statistics. This is not wise. Select the BEHAVIOURS you want to measure and communicate and run the numbers on them. The old adage, “What’s measured gets done” applies. Make sure you are measuring and communicating the RIGHT BEHAVIOURS.

Customer value
The customer value is the value that the members create for Fluor’s customers by finding smart solutions, getting round-the-clock advice from world-class experts and by being able to connect to the system from any location. This type of value is one of the most elusive to prove, but should prove the most exciting for any knowledge manager.

To put this into the context of a global engineering company such as Fluor: Engineers tend to regard the miracles they do as “all in a regular work day” and thus not so special. The outside world tends to look at that a bit differently.

The challenge is to get engineers to tell the story without feeling like they are grandstanding or bragging about it. Having a KM system is just like owning and using a screwdriver – telling how you used it to bring an issue to a good end is something else.

Apart from Fluor, Shell EP has also been active in trying to capture ‘Success stories’.Shell claims a multi-million dollar saving on a worldwide basis. Fluor has an annual enterprise-wide success story and communications campaign called ‘Knowvember’. Success stories are surfaced and judged by a panel of executives on their merit. The success story at the beginning of this article is a fine example of one of them.

Most of these customer-oriented success stories are usually expert solutions provided in a matter of days, enabling customers to solve engineering and design issues in a way that would be impossible to achieve without having a KM system. Communications by e-mail (one-to-few) would never have yielded the same results as the Knowledge OnLine forums (one-to-many).

Fluor assumes that by accumulating all resolved forums and the 24/7 access to experts and knowledge the company can demonstrate similar customer savings to those reported by Shell. Examples are fast start-ups, shorter project schedules, better informed decisions, etc.

One should remember that a refinery started up a few days ahead of schedule may represent a value of millions of dollars. From the context of submitted success stories, the ‘expert’ reader can fairly well estimate this customer saving.

One of the major difficulties in the surfacing of customer value may be the differences between cultures, with one more readily prepared to submit a success story that the other. This problem can be partly overcome by carefully targeting the cultural ‘triggers’ that every culture has. We have to remember that not all cultures have the same “go-do” attitude.

Everyone working with colleagues or companies outside their own country or region has experienced this. A successful cultural targeting yields huge returns in view of submitted success stories and their contents.

Resources
SiteScape’s case study of Shell EP: http://www.sitescape.com/site/content/clients_partners/pdfs/shell.pdf

Koene is Global Knowledge Manager Engineering, Electrical & Control Systems Community Fluor Corp.