Mind Your PEQ – A Focus on KBR Proprietary Equipment

A big part of KBR’s deep domain expertise for energy, chemical and industrial projects is its proprietary equipment (PEQ) and the technologies needed to deliver valuable end products — from biofuels, to blue and green ammonia, to hydrogen, and many others. In this episode, MS Raju, senior director of operations for the Proprietary and Modular Equipment service line of KBR’s Technology business unit, breaks down exactly what propriety equipment is, how KBR differentiates itself through its PEQ offerings, and how the PEQ business is primed to support KBR’s broader growth strategies.

Transcript

IN ORBIT: A KBR PODCAST

Season 4, Episode 4

Mind Your PEQ – A Focus on KBR Proprietary Equipment

INTRODUCTION

John Arnold

Hello, I'm John and this is In Orbit.

Welcome everyone to the podcast. Wherever you are in the world, whatever time, day or night, we appreciate you listening in and staying in our orbit.

Recently, KBR held a special webcast to break down in detail how our Sustainable Technology Solutions business works and the value it brings for our customers, specifically as a driver and enabler of solutions to the global energy trilemma. If you're a listener to the podcast, you've heard us talk about the energy trilemma before, that confluence of energy sustainability, security/reliability and affordability.

For more than a century, KBR’s clients have relied on our deep domain expertise to solve and bring to life their most challenging energy, chemical, and industrial projects. A big part of the formula for solving those challenges is identifying and integrating the proprietary and other equipment and the technologies needed to deliver whatever the end product is, be it biofuels, blue or green ammonia, hydrogen, and many, many, many, many others as the case may be with KBR. And as demand for a global energy transition and new energy economies grow, so does demand for KBR's proprietary equipment and modularization expertise. So we thought a focus on KBRs proprietary equipment, or PEQ, business might be in order.

And joining me today to talk more about all this is MS Raju, senior director of operations for the proprietary and modular equipment service line of KBR's technology business unit, which sits within the broader sustainable technology solutions business segment. Thank you so much for being with me today, MS.

MS Raju

Yeah, thank you for having me, John.

John Arnold

It's a pleasure. Something we like to do here at the outset of each episode is to have our guests talk about themselves for a moment. So would you tell us a little bit about yourself and your career?

MS Raju

Yeah, sure, John. Actually, I'm a metallurgical graduate and I did my postgraduation welding technology. Prior to joining KBR, I was in a fabrication industry. You must be knowing the name Larsen and Toubro Limited. I worked there for 25 years, and we were in fact supplied to KBR. And once KBR started this proprietary equipment business, then I have joined this business group to support KBR in providing these equipments or supplying these equipments across the globe. Since I have been from the same industry, my profile was suited well with KBR and I have been with KBR for the last nine years.

John Arnold

Excellent. So yeah, it sounds like a broad experience in the industry and almost a decade now with KBR. That's excellent. So before we really dive in, I suppose we should define what proprietary equipment is. So I wonder, would you tell us about PEQ, as it's commonly known, and how KBR decides what PEQ is necessary for a particular technology or solution?

MS Raju

Yeah, sure, John. Proprietary equipment or process critical equipment, who's functioning has significant impact on performance of the plant and manufacturing of this equipment, has some critical aspects which needs to be taken care by whoever is doing those equipment. By very nature, these equipments are long lead items and these equipments govern the plant completion schedule. So that is how we decide why proprietary equipment is going to be very critical for the plant's performance.

John Arnold

I see. And what are some of the benefits that customers gain by allocating their PEQ from KBR?

MS Raju

From client's perspective, it's a one-stop solution of having single-point contact and responsibility for process-critical items like proprietary equipments. What I meant here, single-point responsibility from license, basic engineering design, and equipment delivery of all these critical aspects and critical will be handled once one group handles the measure proprietary equipment supplier.

John Arnold

So it covers a lot of ground in what is necessary for an asset to be, even from the design standpoint all the way through to construction, it sounds like.

MS Raju

That's correct, John.

John Arnold

So we mentioned that you are over the proprietary and modular equipment service line. So let's talk modularization for just a moment. KBR has extensive knowledge of modular solutions in a variety of different industries and modularization figures into obviously PEQ as well. So will you elaborate on modular solutions being offered by your product service line (PSL)?

MS Raju

Yeah, definitely, John. Let me come back to you with, for example, when client starts, especially some new technologies. For the success of the new technology, we do the detail engineering of the critical components and take increased liability as a licenser to supply modules for the success of the client's prestigious projects. Advantages of these initiatives for the client, they will have basically three major advantages client will be having. One is lower cost. This is achieved with fixed price EP contract — that is engineering and procurement contract. Superior quality via shop fabrication inspection, well-defined scope split to avoid cost overrun and change orders, at least startups. This will lead to lower cost and optimized schedule. This is achieved through single-point responsibility for basic detailed design, fabrication and site services, parallel path design for procurement and fabrication, robust and global supply chain — KBR has got across the globe close to around 200 supply chain partners — flexibility in working with client requirements, these things will get us towards the optimized schedule.

Then also it adds to optimized site work. That is a third benefit of having this modular solutions. This is achieved through limited site scope, which leads to less operating issues for existing plant sites. Many times it can be revamped type or an opportunity where you have limited scope of time or limited scope of a area for people to work and assemble everything at the site. Less site construction will enable these modules being coming directly to fitted there in position. Improved safety and security, less waste, and material loss as we are planning right from the beginning and everything has been done as per. Well laid out remodel, this will help us in getting the optimized site work. So these are the three benefits I talked about: lower cost, optimized schedule and optimized site work. This will benefit for any client or an EPC contractor to cut down their overall project cycle time.

John Arnold

It sounds like an amazing menu of things to help clients and anyone working on a specific project with that client to be proactive, efficient and from the optimized site work list that you were talking about, also more sustainable.

MS Raju

That's correct, John.

John Arnold

Well, it seems like every year there's a new natural phenomenon like the pandemic or some geopolitical conflict, sometimes several at once that are having far-reaching adverse effects including on global supply chains. MS, will you talk about some of the major challenges you've faced over the past few years in PEQ supplies and how you and your team have overcome those challenges?

MS Raju

Yeah. Managing supply chain during and post pandemic was a big challenge for us. This coupled with Ukraine and Russia were not foreseen by us or the rest of the world. Fortunately, we were able to deliver, win new work, and keep providing firm bids to our clients, mainly because of our relationship-based supply chain management. So all suppliers, whether it is a very small item like an Automax nozzle supplier or a bigger supplier, like full modules, everyone ultimately has two partners. This allowed for real-time information, transparency and teamwork. Their challenges became our challenges and vice versa. So KBR always dealt ... we never felt our contractors as a vendor. We always treated them as a supply partner. And this behavior has really helped us to overcome all these tough situations over the last four or five years, I can say, John.

John Arnold

That's outstanding. In addition to that, over the past several years, KBR has launched many new technologies including nine new process technologies just last year. And for people that are unfamiliar with what a process technology is, it's essentially the scientific know-how and the equipment needed for an asset or a plant or a facility to produce the valuable materials that they're supposed to produce for a variety of end uses. But our technology helps those customers do so in a more sustainable way and helps meet their net-zero targets. How does your business support KBR in helping customers meet those targets?

MS Raju

There are a couple of ways, John. One is to start with the new technologies. For all the new technologies, whatever KBR has launched over the last few years, we as equipment and module experts, we work very closely with our process teams and PSLs to identify the process critical equipment in our offering right from the beginning so that when our process PSLs are interacting with the clients, whatever equipments we identify as critical for the process. Then we develop further and offer them as proprietary equipment and modular solutions when these new technologies are offered to the clients right from the beginning. That is how we are supporting, one is this being a new technology.

Many times there can be a lot of challenges with respect to new equipment, new designs and new materials, supply chain, even the fabrication, feasibility. all these aspects become very new for everyone. So we from the same industry and our group being people with manufacturing expertise, we add that value to the client as well as for the KBR within. But early involvement on these new technologies is what we provide as an offer by which it becomes a value addition for the client as well.

John Arnold

So it sounds like we have to be at the forefront of innovation. You and your team have to be at the forefront of innovation in all of these different areas so that when a new technology comes along, you have to be familiar with it, know how it configure into KBR's modular and proprietary offerings. Is that correct?

MS Raju

That's correct, John. Even for some of the new technologies, our team gets involved in development of new materials or testing of the new materials for different process conditions, tying up with some laboratories across the globe. All these activities are done in parallel so that we are ready with all technical backup information, whichever is required or whatever is asked by the client so that we can answer them appropriately.

John Arnold

Sounds like a huge value-added service. So we've talked a little bit about the pandemic, MS. During that time, KBR and other companies were forced to look inward and at KBR we called it “Reimagining how we deliver.” And it helped us think about how we wanted to conduct the business as a more modern, agile and sustainable company. In terms of PEQ and modular solutions, what are some of the practices or process that you've adopted?

MS Raju

Yeah, this was actually great learning for all of us, John. Though pandemic had many difficulties and many discomforts and a lot of lives people have lost across the globe, but it had opened up many unthinkable things which were possible due to this pandemic. So pre-pandemic era, one of prime activity for our proprietary equipment is carrying out inspection of the equipment, what is being done at different locations across the globe and it was never thought during those times we cannot do the job without traveling or without physically inspecting those items. It was never thought of, and it was never there in any one of our mind at all. In the pandemic situation when global travel is limited, including inland travel within the local areas, the remote inspection, which was already in vogue on need basis, we used to do when it was an extremely urgent situation where we were not able to travel, we used to adopt once in a blue moon or maybe once in 100 type of situations.

That activity became critical to success during the pandemic situation. Our team, KBR teams swiftly adapted to the situation and implemented this remote inspection with support of manufacturing partners, including support from the client. There were a lot of tools like online inspection tools, Google glasses, then remote inspection tools. We were using them, everybody was participating in those inspections sitting across their laptops and the supplier can move around using those Google glasses wearing on his head. He can move around, we can dictate him, we all to move around, show us that item. We can remotely, sitting at our desk, used to inspect, watching the item on the screen. We were very successful. And after the pandemic, or during pandemic, the remote inspection came out as an alternate to an onsite physical inspection in which the person performs inspection actively remotely using sophisticated technological tools. Nowadays, you got a lot of digital tools available, and with that learning, we quickly adopted certain procedures and manuals to regularize this practice. And most of the time, even now, post pandemic also, around 50% of the work we still carry out using this remote inspection techniques.

John Arnold

Fascinating.

MS Raju

In fact, it was like for any inspection people, it happens across the globe. We need to plan for the travel and travel — that’s two or three days for an inspection of around two, three days’ time. We might spend another three, four days planning and traveling. So it was like straight away savings of those many extra days. Coupled with you, you can say you are talking about “green” — you are saving a lot of travel expenses and burning the fuel and all those savings, which came out as a great learning for us.

John Arnold

Yeah, that's tremendous. That's, yeah, a tremendous benefit that came out. I was going to ask, but then you followed it on with the rest of your answer if virtual inspections became or are still used, but it sounds like yeah, that they still are. That's really, really interesting.

MS Raju

Yeah. Though the physical in-person meeting has a different value altogether. So we cannot let go away without a physical in-person meeting with the client at different intervals, at least we could get a good mix of both 50/50 I can say with those learnings and we are now successfully following those practices for all our running projects now.

John Arnold

Excellent. Well, MS, I have one last question before I let you go, and I wondered if you'd just share your views on the future of PQS offerings and its value chain and how you see that supporting KBR's broader business goals.

MS Raju

We have expanded our supply chain for most PEQs in countries such as China, Korea and India, which also has allowed us not only remain competitive, but also allows to meet clients' contractual requirements for in-country purchase in local currencies.

If you look at, there are many clients nowadays, like for example, the Chinese client insists certain percentage of sourcing has to be done within China. And in fact we are now bidding for the major refining contracts from Saudi Arabia, which has got again an insourcing requirement as their project requirement. So this has become a trend or maybe a requirement of different governments at different locations. So we are ready to face the challenges.

In fact, I can tell you over the last three, four years, we could nearly qualify around 250 supply chain partners across the globe covering different geographies so that many a times it happens due to certain war or due to certain geopolitical conditions, we will not be able to source items from some place. We will not be able to get material through some group. So having the suppliers across the globe helps us in mitigating our risk with respect to those type of geopolitical challenges. So we were able to successfully meet those challenges by having a wide supplier base across the globe, John.

John Arnold

Excellent. Well, it sounds like exciting things are on the horizon as the business continues to grow and as opportunities in other countries continue to expand.

MS Raju

Yeah, that's true, John. And in fact, the requirement nowadays is like we have to go for developing supplies from Australia. We have never dealt with them and even supplies from some of the forest countries, the clients in those regions demand insourcing within that country. So this demand is increasing day by day and we are ready to face those requirements and we are confident of meeting those demands.

John Arnold

Fantastic. Well, MS, we thank you so much for joining us for this conversation and we look forward to speaking with you again in the future, I hope.

MS Raju

Sure, John, and thank you very much for your time as well as I enjoyed talking to you. I'm free to talk anytime as in when you want.

John Arnold

Excellent. We'll talk soon.

CONCLUSION

John Arnold

We want to thank MS Raju for taking time out of his very busy schedule to speak with us about the expertise KBR provides around PEQ and modular solutions. I want to thank my wonderful colleagues, Lubna Salim, and Rakesh Singh for their help in putting this episode together. Also, a big thank you to our producer, Emma, for her work. We could not do this without you.

And as always, many thanks to you, dear listeners. If you like what you heard today or love the past episode, or if you have an idea for a future episode, let us hear about it by emailing us at inorbit@kbr.com. We know you've got a lot of different things vying for your attention, we appreciate you checking in with us and keeping us in your orbit. Take care.