Knowledge-Based Systems (KBS) are developed to contain substantial elements of human knowledge and expertise in a well-defined domain, and use these to support user or expert tasks. Issues related to the social and organisational contexts of these systems are widely acknowledged to be particularly critical to their success. However, methodology proposals usually stop short of adequately handling soft and unstructured data that frame the contexts of use. The handling of qualitative data needs to be done in a way that directly (...) impinges on the wider Knowledge-Based System engineering processes and decisions. In this paper, we discuss the nature of context-sensitive issues, and describe a methodological approach for resolving them through the rigorous analysis of qualitative data, using a methodology which is based upon the Grounded Theory method from the social sciences. (shrink)