Purpose Project delivery organizations (PDO) have to develop competitive advantage against new entrants. This study aims to explore the knowledge conversion transactions proposed by Nonaka and Takeuchi (1995) in project phases through the interplay of dynamic and operational capabilities. This study is based on a case study for a PDO in the engineering industry. Design/methodology/approach This study proposes a model of dynamics between the constructs, and its illustration with a case study of a PDO. The research extends the socialization, externalization, combination and internalization (SECI) model of knowledge management (KM). Findings This study provides an overview of existing research related to the constructs like applicability of operational and dynamic capabilities, knowledge configuration and knowledge management processes to individual projects delivered by a PDO for its clients. Further, this study provides an overview of the knowledge configuration adopted by an organization and how it helps to build the competitive advantage of an organization. Research limitations/implications This study proposes a model for applying the constructs to each of the phases of a project. It then illustrates the knowledge value chain in a PDO in the field of engineering projects with detailed insights into the steps of sensing, seizing and sharing knowledge across the project life cycle. Practical implications Project-based firms can use the learnings and create their own SECI model linking the conceptual model of KM and PDO and KM value chain. Social implications In social projects implementation, this conceptual model and process will be helpful in building efficiency and effectiveness. Originality/value This case study presents the knowledge value chain in a PDO in the field of engineering projects with detailed insights into the steps of sensing, seizing and sharing knowledge across the project life cycle.