Businessmodel of KBR

Customer Segments

KBR provides a range of services targeted primarily at commercial entities operating within the global hydrocarbons and international government services market sectors. The Company serves customers across the entirety of the oil and gas value chain, including companies within the following sectors:

• Offshore and onshore oil and gas extraction companies;
• Oil and gas refiners;
• Petrochemicals producers;
• Speciality chemicals producers; and
• Fertiliser producers. In 2015 the only client that accounted for more than 10% of KBR’s total revenue was Chevron, largely relating to a liquefied natural gas project in Australia. KBR also serves a number of government entities, particularly organisations belonging to the governments of the US, the UK, and Australia.

KBR serves customers across approximately 70 countries. The US continues to be the Company’s largest market, with projects in the US accounting for more than 40% of the Company’s total revenue for 2015.

Value Propositions

KBR provides value to its customers in the following ways:

• Its reputation and industry standing, with a proven track-record for successfully delivering large, complex and difficult projects to clients globally;
• Its health and safety and environmental record, with the Company implementing secure and fully compliant planning, assessment, and execution practices;
• Its industry experience and technical expertise, with the Company providing technologically up-to-date services and employing highly-skilled and experienced staff up to the executive level;
• Its asset services, with the Company providing comprehensive asset services throughout the course of long-term contracts and projects;
• Its global reach, with the Company participating in projects across 70 countries worldwide. ### Channels

KBR operates a website at www.kbr.com, through which its provides customers with information on its various activities, locations and projects. The nature of the Company’s services does not lend itself to the operation of an online sales channel.

KBR operates a network of physical sales and project offices across its numerous operating jurisdictions, including in India, Indonesia, Australia, Singapore, Brazil, the UAE, China, and Angola. The Company operates direct sales teams organised geographically.

KBR also provides services through a number of joint-venture companies, where it works with regional partners on projects and groups of projects. These joint-ventures include Mantenimiento Marino de Mexico, Aspire Defence Holdings, and Brown and Root Industrial Services.

Customer Relationships

KBR does not offer any services to its customers on a self-service basis. The complex nature of the Company’s various projects requires that it consults directly with its customers to jointly outline a detailed project brief, including budget requirements and resource management. The Company works largely on a project-by-project basis, providing tailored services to each individual client. It, however, seeks to establish ongoing relationships, securing recurring business from its clients.

KBR provides ongoing support to its clients throughout their relationships. It also enables new and existing clients to contact the Company’s various departments and regional offices with enquiries, posting email and telephone contact information on its website. KBR additionally keeps its customers updated with company developments through its news portal and its social media accounts, including with Facebook, Twitter, LinkedIn and Instagram.

Key Activities

KBR is an engineering, procurement, construction and services company, primarily serving clients operating within the global hydrocarbons and international government services market sectors, including leading oil and gas groups such as Chevron.

The Company operates principally through three core business segments: Technology and Consulting, comprising its knowledge-based services activities with those of its three consulting brands as a single unit; Engineering and Construction, comprising project delivery solutions from conceptual planning, to delivery and ongoing asset services, such as maintenance; and .Government Services, comprising its engagement in service contracts for international government, principally those of the US, the UK, and Australia.

Key Partners

KBR collaborates in a number of ways with partner companies, with a view to extending its own range of services and supporting its various project operations. These partnerships can broadly be categorised as:

• Joint Venture Partners, comprising other engineering firms and financial investors with which the Company typically collaborates on a regional basis or on specific projects through mutually-owned entities;
• Alliance Partners, primarily comprising a range of industrial, engineering, and infrastructure companies with which the Company collaborates on non-core projects and shares tools and resources; and
• Supplier Partners, comprising a range of resource and service providers that supplement KBR’s own offerings and support its project activities. KBR has a number of joint-venture tie-ups, including with US-based Bernhard Capital Partner, Japan’s JGC and Choyoda, and Grupo R in Mexico. It has also recently launched a project with alliance partners John Holland, VicRoads, Metro Trains Melbourne, Public Transport Victoria, and the Level Crossing Removal Authority to undertake rail infrastructure renovations in Australia.

Key Resources

KBR’s key resources are its technologies and intellectual properties, its equipment and physical infrastructure, its supply chain, its partnerships, and its personnel.

KBR has developed or has the right to license a range of technologies, including technologies held under license from third parties, used for the production of a variety of petrochemicals and chemicals, which the Company believes differentiates it from its competitors. KBR protects these technologies through various patents and agreements.

Cost Structure

KBR incurs costs in relation to the maintenance and operation of its physical infrastructure and equipment, the management of its supply chain, the management of its partnerships, and the retention of its personnel.

In 2015, the Company’s accrued general and administrative costs in the amount of $155 million, comprising corporate overhead expenses corporate business development, information technology, finance and corporate accounting, and the payment of salaries and benefits to its workforce of 22,000 employees worldwide.

Revenue Streams

KBR generates revenue through the provision of various engineering and consulting services, divided across its three core segments:

• Technology and Consulting, comprising revenue derived by the Company’s three consulting units and its knowledge-based services;
• Engineering and Construction, comprising revenue derived from the Company’s participation in large-scale engineering and infrastructure projects; and
• Government Services, comprising revenue derived from government service contracts. In 2015 KBR generated annual revenue of $5.10 billion, down considerably on the $6.37 billion recorded by the Company in 2014. The Company attributed this decrease to the completion of several large engineering and construction projects and the deconsolidation of its industrial Services Americas business.

The vast majority of KBR’s revenue is generated by its Engineering and Construction segment, which recorded an annual revenue of $3.50 billion in 2015. The Government Services segment recorded revenue of $663 million, while the Technology and Consulting segment recorded $324.