What We Do
This is from a KBR newsletter and it gives some insight as to what is involved in this business.
U.S. Embassy in Kabul
KBR meets embassy construction challenges
The American embassy in Kabul, Afghanistan, had been evacuated since 1979, when the ambassador, Adolph Dubs, was kidnapped and assassinated. The next two decades saw the country invaded by the Soviet Union, torn by civil war, ruled by the Taliban and occupied by Al Qaeda. During that time, the embassy buildings were inhabited by Afghani caretakers, but the U.S. had no official presence.
All that changed in September 2001. Afghanistan was launched on a new course, and the country took on a new importance for the U.S. government. That led to KBR's competitively bid $150 million contract with the U.S. Department of State (DoS), awarded in 2002, to design and build a new embassy compound on the site of the old one.
KBR's participation with the DoS started with a 1999 contract to upgrade the security of U.S. embassies and consulates around the world following the bombing of the U.S. embassies in Dar es Salaam and Nairobi. The execution of that program was valuable experience in competing for this new job, and the Kabul contract has already led to another new embassy job in Skopje, Macedonia.
The construction arm of the DoS, the Bureau of Overseas Buildings Operations, initiated a long-range building program that increased the number of embassies through reduced costs, design and construction time. The main instrument of this change was the creation of a Standard Embassy Design that established criteria such as common specifications and floor plans. The specific requirements for the Afghanistan embassy and its size were dictated by the country's strategic importance in the global war on terrorism and the challenges of functioning in a city that cannot be totally secured against enemies.
In outlining the scope of this government contract, one enters a dense forest of DoS acronyms. For instance, this is a new embassy compound (NEC) that includes a new office building (NOB) to replace an existing office building (EOB), along with quarters for the Marine security guards (MSGQ) and apartments for the diplomatic staff (SDA), a complete utility plant and perimeter security structures with three Compound Access Control (CAC) facilities.
The compound had to be completely self-sufficient and able to function for long periods of time on its own resources. The design team, led by Design/Engineering Manager Tom Christensen, had to make it work without bringing anything in from the outside except fuel -- and there were large underground tanks for that. The design included power generation, water wells, water purification, wastewater treatment and recycling systems for irrigation. How long the compound could last without re-supply is classified information, but the answer is surely, "long enough."
In addition, all of the embassy's American staff had to be housed inside the compound for security reasons. This meant a total of 146 apartments, for everyone from the ambassador on down, as well as separate barracks for the Marine guards.
Because the old embassy building, the EOB, had been unoccupied for so long, there was no way to guarantee that its security had not been compromised. So another contractor did a very quick renovation of the existing buildings to continue the diplomatic mission while KBR started construction of the new buildings on the same compound.
KBR began to mobilize in Kabul in late 2002; the first task was to build a camp for the workers. By Spring 2003, construction started in earnest on the compound itself, under Site Project Manager Bob McNamara. With the guidance and supervision of the current Site Project Manager Bruce Walker, the project is virtually complete now, after two-and-a-half years of unusual challenges.
The first challenge was the question of who was going to do the work. Ordinarily, the answer would be obvious: hire local contractors and tradesmen. But this job required full background checks for everyone onsite, and that in turn meant an investigation for every worker. This was simply not possible in Afghanistan. Decades of civil war had destroyed what few records had ever been kept. There was virtually no way for workers to prove who they were, where they came from, or anything about their past. And, even in times of peace, Afghan society had never placed much importance on such records.
Instead, KBR used a Turkish subcontractor that could get background checks for every worker. This firm performed about 80 percent of the work. The rest had to be done by Americans with security clearances -- KBR employees with a few specialized subcontractors.
KBR also supplied its own security for both the job site and the KBR workers' camp, and the security workers naturally also had to pass the strictest security checks. The solution here was a private firm staffed by Gurkhas -- former members of the elite British regiment recruited from the Gurkha people of Nepal. Everyone in Asia knows about the Gurkhas, and nobody bothers them. With the Gurkhas on site, KBR had no serious security problems in Kabul.
Perhaps the biggest challenge came from the remoteness of the site and the security requirements that extended to procurement and shipping.
There was no Home Depot in Kabul. KBR couldn't buy so much as a barrel of nails there in 2002. Absolutely everything had to be brought in -- by ship, and then by truck, since Afghanistan has no seacoast. It took a minimum of 60 days to acquire anything.
And much of the shipping had to be secure -- sealed containers of the highest quality, with special tamper-resistant features built in -- and then thoroughly inspected and decertified by a government agent on arrival at the site.
The KBR team met these challenges, as they always do, delivering this complicated and exacting project on time and on budget. Both the lessons learned and the talent developed are now being applied to other KBR projects, such as the embassy in Macedonia and other U.S.-based design build construction projects for the U.S. Defense Department.
One measure of the skill with which the job was executed is the admirable safety record of the team involved. The first million hours were logged without incident. After some minor injuries in 2003, another string of more than two million incident-free hours has now been added to the books. This is quite impressive considering that KBR's safety culture was completely new to the subcontractor carrying out the bulk of the work.
The Kabul embassy is a completely new facility that represents the most advanced state-of-the-art construction. But KBR did preserve at least one important element of the old site. In 2001, U.S. Marines brought rubble from the World Trade Center, buried it on the embassy grounds and built a monument to remind everyone of the nature of their mission. This monument turned out to be situated in an unfavorable location for the new construction. So KBR carefully excavated and relocated everything to a prominent new site. That's what KBR does -- physical construction, but always with a view to human purpose and meaning.
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That's enough company propaganda for now. Goodnight.
U.S. Embassy in Kabul
KBR meets embassy construction challenges
The American embassy in Kabul, Afghanistan, had been evacuated since 1979, when the ambassador, Adolph Dubs, was kidnapped and assassinated. The next two decades saw the country invaded by the Soviet Union, torn by civil war, ruled by the Taliban and occupied by Al Qaeda. During that time, the embassy buildings were inhabited by Afghani caretakers, but the U.S. had no official presence.
All that changed in September 2001. Afghanistan was launched on a new course, and the country took on a new importance for the U.S. government. That led to KBR's competitively bid $150 million contract with the U.S. Department of State (DoS), awarded in 2002, to design and build a new embassy compound on the site of the old one.
KBR's participation with the DoS started with a 1999 contract to upgrade the security of U.S. embassies and consulates around the world following the bombing of the U.S. embassies in Dar es Salaam and Nairobi. The execution of that program was valuable experience in competing for this new job, and the Kabul contract has already led to another new embassy job in Skopje, Macedonia.
The construction arm of the DoS, the Bureau of Overseas Buildings Operations, initiated a long-range building program that increased the number of embassies through reduced costs, design and construction time. The main instrument of this change was the creation of a Standard Embassy Design that established criteria such as common specifications and floor plans. The specific requirements for the Afghanistan embassy and its size were dictated by the country's strategic importance in the global war on terrorism and the challenges of functioning in a city that cannot be totally secured against enemies.
In outlining the scope of this government contract, one enters a dense forest of DoS acronyms. For instance, this is a new embassy compound (NEC) that includes a new office building (NOB) to replace an existing office building (EOB), along with quarters for the Marine security guards (MSGQ) and apartments for the diplomatic staff (SDA), a complete utility plant and perimeter security structures with three Compound Access Control (CAC) facilities.
The compound had to be completely self-sufficient and able to function for long periods of time on its own resources. The design team, led by Design/Engineering Manager Tom Christensen, had to make it work without bringing anything in from the outside except fuel -- and there were large underground tanks for that. The design included power generation, water wells, water purification, wastewater treatment and recycling systems for irrigation. How long the compound could last without re-supply is classified information, but the answer is surely, "long enough."
In addition, all of the embassy's American staff had to be housed inside the compound for security reasons. This meant a total of 146 apartments, for everyone from the ambassador on down, as well as separate barracks for the Marine guards.
Because the old embassy building, the EOB, had been unoccupied for so long, there was no way to guarantee that its security had not been compromised. So another contractor did a very quick renovation of the existing buildings to continue the diplomatic mission while KBR started construction of the new buildings on the same compound.
KBR began to mobilize in Kabul in late 2002; the first task was to build a camp for the workers. By Spring 2003, construction started in earnest on the compound itself, under Site Project Manager Bob McNamara. With the guidance and supervision of the current Site Project Manager Bruce Walker, the project is virtually complete now, after two-and-a-half years of unusual challenges.
The first challenge was the question of who was going to do the work. Ordinarily, the answer would be obvious: hire local contractors and tradesmen. But this job required full background checks for everyone onsite, and that in turn meant an investigation for every worker. This was simply not possible in Afghanistan. Decades of civil war had destroyed what few records had ever been kept. There was virtually no way for workers to prove who they were, where they came from, or anything about their past. And, even in times of peace, Afghan society had never placed much importance on such records.
Instead, KBR used a Turkish subcontractor that could get background checks for every worker. This firm performed about 80 percent of the work. The rest had to be done by Americans with security clearances -- KBR employees with a few specialized subcontractors.
KBR also supplied its own security for both the job site and the KBR workers' camp, and the security workers naturally also had to pass the strictest security checks. The solution here was a private firm staffed by Gurkhas -- former members of the elite British regiment recruited from the Gurkha people of Nepal. Everyone in Asia knows about the Gurkhas, and nobody bothers them. With the Gurkhas on site, KBR had no serious security problems in Kabul.
Perhaps the biggest challenge came from the remoteness of the site and the security requirements that extended to procurement and shipping.
There was no Home Depot in Kabul. KBR couldn't buy so much as a barrel of nails there in 2002. Absolutely everything had to be brought in -- by ship, and then by truck, since Afghanistan has no seacoast. It took a minimum of 60 days to acquire anything.
And much of the shipping had to be secure -- sealed containers of the highest quality, with special tamper-resistant features built in -- and then thoroughly inspected and decertified by a government agent on arrival at the site.
The KBR team met these challenges, as they always do, delivering this complicated and exacting project on time and on budget. Both the lessons learned and the talent developed are now being applied to other KBR projects, such as the embassy in Macedonia and other U.S.-based design build construction projects for the U.S. Defense Department.
One measure of the skill with which the job was executed is the admirable safety record of the team involved. The first million hours were logged without incident. After some minor injuries in 2003, another string of more than two million incident-free hours has now been added to the books. This is quite impressive considering that KBR's safety culture was completely new to the subcontractor carrying out the bulk of the work.
The Kabul embassy is a completely new facility that represents the most advanced state-of-the-art construction. But KBR did preserve at least one important element of the old site. In 2001, U.S. Marines brought rubble from the World Trade Center, buried it on the embassy grounds and built a monument to remind everyone of the nature of their mission. This monument turned out to be situated in an unfavorable location for the new construction. So KBR carefully excavated and relocated everything to a prominent new site. That's what KBR does -- physical construction, but always with a view to human purpose and meaning.
-----------------------------------------------------------------------------------------------
That's enough company propaganda for now. Goodnight.
posted by BC at 9:31 PM
1 Comments:
You said "The KBR team met these challenges, as they always do, delivering this complicated and exacting project on time and on budget. Both the lessons learned and the talent developed are now being applied to other KBR projects, such as the embassy in Macedonia and other U.S.-based design build construction projects for the U.S. Defense Department."
While there were some "stars" on the Kabul job, for the most part I have yet to witness such gross incompetence in my career. In a design/build job the prime contractor must maintain design cost control over the A&E, which did not happen. There was no material schedule, even though this was pointed out by Halliburton auditors early in the project. As a result, KBR has to fly much of the material over as it was usually purchased long after it was needed. KBR has to lease at least five Antonovs at about $550K a trip to get material there on time. Also, there were times material was flown on Antonovs but sat idle for months afterward. The company spent approximately $17M to ship $28M worth of material. Material would show up on site damaged but there was no procedure established to control this or to be able to make timely claims to the carrier. Material control was essentially non-existent. KBR often bought material even though the material was already on site.
The Kabul project was completed months behind schedule. Some of the blame for this delay does lie with the State Department due to delays in approving designs. However, KBR's contract administration was practically non-existent and the State Department was not held accoutable.
Initial negotiations with Turkish sub-contractor resulted in each part of the job being broke up into smaller parts and each task was negotiated over the life of the job, reducing the sub's risk, however, the overhead and fee they were able to apply was about 26.5%, an amount far in excess of normal profit on a construction job. We did later get to cut this back.
I could go on. KBR lost $7M on this job when it should have made about $13M gross. This job was on a cost-plus basis up to about May of 2004 at which time a fixed price was negotiated and KBR still lost money.
Regarding Skopje, you would think KBR would learn from the Kabul job and during execution I guess they are to some extent. However, the total bid was $62M compared to two other bids of $78M and $82M from contractors who have each built at least 4 embassies. When one leaves that much on the table you have to wonder what happened. There was no immediate reestimate of the job and even as the construction managers started to find the multi-million busts in labor and utilities cost, which may account for the $16M/20M spread these were ignored. They had even left out an entire building from the estimate. I continue to wonder in amazement why these costs are not reflected in the cost reports that go up to upper management. I am guessing that since the person responsible for the estimate is also the person responsible for the cost report if there is not a conflict of interest and a fear of admitting to this huge series of mistakes. What is also interesting is that the atmosphere is such that even though a number of experience people inside know this job will loose several million dollars this information is not getting up the chain of command.
With an IPO coming up one would think there would be a real effort to make sure potential investors would not be mislead by projections. It could be that the potential loss of as much as $9M is not a material number for a company the size of KBR but in these days it does not take much to be material.
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