QA-M-011 Quality Assurance Manual Procurement

Table of Contents

1. General
2. Supplier and Subcontractor Assessments/Qualification
3. Purchasing
4. Verification of Purchased Products and Services
5. References

Company procurement policy is to place contracts with technically competent and financially sound suppliers and subcontractors to perform the defined scope of work by the most economical means commensurate with the attainment of the desired quality, within the project schedule.

The procurement activities on a project may include:

• establishing procurement strategy
• establishing special terms and conditions
• assessment of suppliers and subcontractors
• establishing project supplier list
• issuing of enquiry documents
• expediting quotations
• handling and evaluation of quotations
• negotiations and agreeing purchase
• issuing purchase orders and subcontracts
• supplier document handling
• inspection scheduling
• pre-inspection (pre-fabrication) meetings
• inspection and testing
• expediting of documents and activities
• monitoring and reporting

For important purchases, a level of confidence is required in the stability and capability of the potential suppliers and subcontractors.

Such a level of confidence may be achieved from one or more of the following:

• recent satisfactory experience by Company and/or its client(s)

• third party certification

• Company’s assessments from:

• financial investigations

• Quality Manual evaluation

• capability and facility assessment.

Company’s registers of suppliers and subcontractors shall be maintained to include the available information derived from the above mentioned experiences and assessments.

Assessments, apart from financial investigations, shall be consid­ered valid for two years.

For a specific project, suppliers and subcontractors shall be approved by the Project Manager, Project Procurement Coordinator and the client prior to inclusion on a list of acceptable/approved suppliers.

At the conclusion of a significant contract with a supplier or subcontractor, an evaluation report shall be prepared that reflects Company's level of satisfaction of performance. The results of this report shall be registered.

2.2 Third Party Certification

A supplier or subcontractor may have been awarded a certificate reflecting a recognized product quality and/or recognized quality system. If such a certification has been awarded by a recognized national or international body, Company may consider this as a satisfactory level of confidence. However, dependent on the nature of certification, Company's experience with the issuing body and the criticality of the potential purchase, a further assessment of the suppliers or subcontractor by Company may be decided upon by the Project Manager and the Project Procurement Coordinator on the advice of the Manager of Quality Assurance.

2.3 Company's Assessments

Company's assessment of a supplier or subcontractor may cover his financial stability as well as his performance capability and quality system, dependent on the risks associated with the proposed purchase and the project requirements.

The financial stability may be determined from direct investiga­tions, through formal channels, from published statements and/or from personal contacts.

The quality manual evaluation, if required, shall be carried out with the aid of the procedure and checklist. The report shall be completed and distributed and the results registered (ref.11.5.14).

The evaluation report may recommend/require the supplier or subcontractor to update the quality manual, or supply additional information, within a specified time frame, before considering the manual as acceptable.

If the quality manual submitted to Company, is a controlled copy it shall be maintained on file by the Manager of Quality Assurance including further updates submitted by the supplier or subcontractor.

The capability and facility assessment shall be carried out if the required level of confidence has not been sufficiently estab­lished by the above named means. Qualified/experienced assessors shall be assigned to execute the assessment in accordance with the procedure and checklist. These assessments cover the facilities available, the capabilities of equipment and personnel together with the operational quality system (ref.11.5.4 and 11.5.8).

The same procedure and checklist may also be used for carrying out an audit after the placement of a purchase order (see section 22).

The results of the assessment shall be reported and registered.

Activities for purchasing include:

• establishing supplier list
• establishing special terms and conditions
• issuing of enquiry documents and expediting quotations
• handling and evaluation of quotations
• negotiations
• issuing purchase orders.

All enquiry and purchasing activities shall be recorded in the purchasing status reports regularly issued on each project.

The requisition, normally originated by the Specialist Engineer or by Project Engineering, defines the specific scope of material/services to be purchased, the extent of suppliers design responsibility, rele­vant specifications, international codes and/or standards, drawings and data sheets.

All requisitions shall include, as minimum:

• scope of supply or service
• lists of required supplier documents, with their periods for submission
• required levels, standards and, if necessary, specific requirements for inspection and testing
• types of certification of materials
• drawings
• specifications

The suppliers or subcontractors may be required to provide, if appropriate, the following information in the quotation:

• unit and total prices and terms of delivery
• equipment or material prices covering all requirements of the enquiry document and particularly statutory requirements concerning design, inspection, etc.
• delivery dates, backed-up, if necessary, by preliminary fabrication schedules
• packing and shipping specifications and methods together with estimated shipping weights and dimensions
• details of start-up assistance and rates for such work
• technical documents and drawings
• for applicable equipment items, a supplementary quotation including quantities, unit and total prices for spare parts
• details of proposed subcontractors
• required special tools
• list of any proposed deviations from the enquiry specifications
• Quality Manuals
• inspection/quality plans

The enquiry documents prepared by the engineering and/or subcon­tracts group shall be submitted to the Project Procurement Coordina­tor under cover of a "Request For Quotation" form.

Prior to the issue of the enquiry documents for quotation, the Project Procurement Coordinator shall review the package and ensure that it is complete.

The number of companies to be invited to bid is selected, if possible, to ensure that sufficient quotations are received for comparison.

The Project Procurement Coordinator shall cater for all communica­tions with the suppliers and subcontractors prior to the receipt of quotations, including but not limited to:

• responses to raised questions
• supply of additional information
• expediting the quotations

Submitted quotations shall be treated as confidential documents that shall be held secure after receipt and only opened, in accordance with the established bid opening protocol, by the authorized indi­viduals.

Technical bid evaluation shall be prepared by specialist engineers. Commercial bid evaluations shall be prepared by the buyers. Bid tabulations shall show the evaluation of all bids on a comparable basis, proper account being taken, if applicable, of differences in installation, operating, maintenance and spare-parts costs, payment terms and cancellation fees together with any important cost effects on other equipment, materials or construction work (ref.11.5.2).

Completed bid analyses shall also include the control budget value and the scheduled delivery date.

If deemed necessary, bid clarification meetings shall be held with the suppliers that have submitted the most attractive bids, to ensure that their quotations meet all requirements, prior to completion of the bid evaluation.

After receipt of client's approval of the bid tabulation, if necessary, pre-award meetings with the selected bidder(s) may be held for major and critical equipment (ref.11.5.7).

Once all necessary evaluations, investigations and negotiations have been completed, the decision to place the purchase order shall be taken by the Project Manager and the Project Procurement Coordinator, in agreement with the client if appropriate.

All documents previously issued by Company for quotation shall be updated, as necessary, in preparation for the issue for purchase.

The purchasing documents prepared by the engineering and/or subcon­tracts group shall be submitted to the Project Procurement Coordinator under cover of a "Request For Purchase" form.

The Project Procurement Coordinator shall organize the preparation of the purchase order (ref.11.5.6 and 11.5.5).

The purchase order documents may include but not be limited to:

• Purchase Order Form
• Requisition(s) and Referred Documents
• General and/or special Instructions to Supplier/Subcontractor
• Conditions of Purchase/Subcontract

In special cases, if time is of the essence, a letter or telefax of intent may be sent before the purchase order documents have been completed. However, under no circumstances may a verbal commitment be made.

Once the purchase order package has been compiled it shall be checked by the Project Procurement Coordinator to ensure that it is complete. Prior to its issue, the purchase order shall be signed by the Manager of Procurement or his delegate or the client, as appro­priate.

Subsequent amendments to placed purchase orders shall be subject to the same authorizations as the original purchase order. (Also see section 11.4.2).

Activities during the verification stages include:

• handling supplier's data
• review of supplier's documents
• inspection and testing
• expediting

Data from suppliers and subcontractors shall be systemati­cally controlled by the Vendor Print Control group to clearly monitor and expedite receipt, evaluation and, if appropriate, return.

Such data may be in the form of calculations, drawings, manuals or any other hard or computerized (software) form.

The registration system shall regularly produce status reports indicating, as a minimum:

• due dates
• received data
• awaited data

These reports coupled with the requisition and purchase order require­ments, form the basis of activities for expediting the data from suppliers and subcontractors as well as expediting the data reviewed within Company. (See sections 11.4.2 and 11.4.4).

Data received from suppliers and subcontractors shall be circulated by the Vendor Print Control group to the specialists required to carry out the reviews.

The Project Engineering group shall ensure that all appropriate disciplines have had the opportunity to appraise the data and have signed/initialed the documents.

The review of supplier's data shall assure that the submitted work accurately reflects the requirements. However, this does not relieve the supplier or subcontractor from his obligations of the purchase order contract.

Any changes, corrections or comments resulting from the review of documents shall be clearly marked-up on those documents in accor­dance with the procedures (ref.11.5.12 and 11.5.3).

Changes and/or variations to the work, recognized during this phase, shall be communicated by a re-issue of Company's relevant documents coupled to a purchase order amendment (see section 11.3.3). For important changes that may affect the work already being carried out, the supplier or subcontractor shall be promptly advised by telefax. Any verbal communications shall be confirmed in writing.

Company's purchase order and subcontract documents shall clearly reflect the inspection and test requirements to be satisfied.

If appropriate the supplier or subcontractor shall be required to prepare a quality plan (inspection and test plan).

The responsibility for inspection and testing, together with all related and required documentation, rests solely with the supplier or subcontractor.

Company shall verify the work, as described in sections 14 and 15.

If required, the client or his agent shall also be afforded the right to verify the work at any stage.

Company shall carry out expediting activities to ensure that sched­ules are maintained by suppliers and subcontractors for supply and delivery of the work (ref.11.5.11).

Active expediting shall be carried out by internal (office) and external expediters. The expediting activity is preferentially independent from the inspection activity so as to minimize conflicts of responsibilities.

The Expediting Manager is also responsible for the direction and control of the Vendor Print Control group that handles supplier and subcontractor data.

If necessary, Company's expediting procedures and guides shall be adapted to satisfy the project requirements.

Expediting by communication from Company's office(s) is carried out by internal expediters assigned to the project.

The main functions of the internal expediters shall include:

• expediting of purchase order, assigned to the inside expediting section, by phone, letter or telefax
• liaison with the Project Engineering group on technical matters
• liaison with the Project Control group on schedule matters
• liaison with construction on delivery and shipping matters
• the preparation of information for use by external expediting personnel
• follow-up work on reports from external expediting personnel
• correlation of expediting reports and other delivery, shipment and material receipt information
• follow-up of shipments, transport arrangements, etc. through the traffic coordinator
• preparation and monthly issue of computerized materials pro­gress and status reports
• liaison with the Project Inspection Supervisor about inspection progress, releases, etc.

Expediting by visits to suppliers is carried out by external expediters.

External expediters are assigned to take action on those purchases most critical for the delivery schedule. During the term of a project, the categories of criticality may vary. This, in turn, may vary the assignment and/or frequency of visits of the expediters.

During the visits, the assigned expeditor shall concern himself with the following aspects:

• clear understanding of scope of supply and verification that supplier has all applicable documents
• preparation/submission of drawing schedules
• dates of submission of drawings for approval
• submission of fabrication schedules and review of same
• issue of suborders and review of same
• recommendation to Home Office for expediting of critical suborders
• review of general shop workload throughout fabrication of equipment and evaluation of any adverse impact on delivery
• contact with supplier's senior management to ensure that corrective/ remedial actions are taken if required

Expediters shall issue reports, immediately after their visits to the Project Expediting Supervisor for follow-up to apply remedial action as required.

If faced with predicted delays for critical items, the Project Expediting Supervisor shall review the matter with the Project Procurement Coordinator and the project management and then arrange for a supplier's management meeting aimed at achieving schedule improvement.

Finalization of these remedial actions shall be subject to approval by the Project Manager before implementation. The client shall be advised of these activities and his approval shall be acquired if appropriate.

5. References