SAEP-381

Engineering Procedure SAEP-381 Project Quality Issues Escalation Process

17 March 2013

Document Responsibility: Inspection Engineering Standards Committee

Saudi Aramco DeskTop Standards Table of Contents 1

Scope……………………………………………... 2

2

Purpose…………………………………………… 2

3

Conflicts and Deviations………………………… 2

4

Applicable Documents………………………….. 3

5

Definitions………………………………………… 3

6

Violations Definitions……………………………. 4

7

Instructions……………………………………….. 5

8

Responsibilities………………………………….. 8

9

Cancelled Quality Notifications……………….. 10

Appendix A - Quality Issues Reporting Process…… 11 Appendix B - Contractor’s Internal NCR……………. 12 Appendix C - Quality Issues Escalation Matrix…….. 13 Appendix D - Examples of Violations and Escalation Steps………………... 14 Appendix E - Responsibilities for Quality Issue Notification………... 16 Appendix F - Index…………………………...………. 17

Previous Issue: 28 January 2012 Next Planned Update: 28 January 2017 Revised paragraphs are indicated in the right margin Primary contact: Kakpovbia, Anthony Eyankwiere on +966-3-8801772 Copyright©Saudi Aramco 2013. All rights reserved.

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Document Responsibility: Inspection Engineering Standards Committee SAEP-381 Issue Date: 17 March 2013 Next Planned Update: 28 January 2017 Project Quality Issues Escalation Process

1

2

Scope 1.1

This Procedure establishes instructions for escalation of unresolved quality issues in Saudi Aramco projects including delinquent quality concern notifications.

1.2

This SAEP does not apply to: Escalation of non-conformities identified by Operation Inspection Division (OID) during assessments of Operation Inspection Units (OIUs) in operating facilities.

●

Deficiencies noted during internal assessments by the Inspection Department.

●

Deficiencies noted during Health Checks conducted by APMID for Asset Performance Management (APM).

Purpose 2.1

2.2

3

●

The purpose of this SAEP is to: 2.1.1

Implement a consistent method for escalating quality issues including Logbook Entries (LBEs), Non-Conformance Reports (NCRs), Worksheets (WSs) and Delinquent Worksheets (DWSs), as defined in Appendix A, “Quality Issues Reporting Process.”

2.1.2

Clearly define the corporate process for project quality issue escalation including its documentation, requirements and definition of violation categories, systems and procedures.

2.1.3

Ensure roles and responsibilities for project quality issue escalation are well defined and auditable.

The intent of quality issue notification is to report and record quality or technical deficiencies, determine the root cause of the problem, record the actions taken to correct non-conformities, avoid recurrence and enhance overall project quality.

Conflicts and Deviations 3.1

Any conflict between this procedure and other applicable Mandatory Saudi Aramco Engineering Requirement (MSAER) shall be resolved in writing through the Chairman, Inspection Engineering Standards Committee (IESC).

3.2

Direct all requests to deviate from this procedure in writing to the Manager, Inspection Department of Saudi Aramco, Dhahran.

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4

Applicable Documents The applicable requirements in the latest edition of the following Saudi Aramco Engineering Procedures, Schedule “Q” and General Instructions (GIs) shall be considered an integral part of this procedure.  Saudi Aramco Engineering Procedures SAEP-301

Instruction for Establishing and Maintaining Saudi Aramco Engineering Requirements

SAEP-302

Instructions for Obtaining a Waiver of a Mandatory Saudi Aramco Engineering Requirement

SAEP-379

Quality Issues Notification

SAEP-380

Equipment Deficiency Report

SAEP-1150

Inspection Coverage on Projects

SAEP-1151

Inspection Requirements for Contractor Procured Materials and Equipment

 Contract Schedule “Q”

Quality Requirements

 Saudi Aramco General Instruction

5

GI-0400.001

Quality Management Roles and Responsibilities

GI-0002.710

Mechanical Completion and Performance Acceptance of Facilities

Definitions ACD: Agreed Completion Date APM: Asset Performance Management APMID: Asset Performance Management Integration Division DWS: DELINQUENT WORKSHEET - Mechanism to escalate unresolved Worksheets CQP: Contractor Quality Personnel CQR: Contractor Quality Representative INCR: Internal Non Conformance Report (Issued by Contractor) LBE: Logbook Entries (First level of reporting quality deficiency using Manual Logbook or the Quality Management Information System, QMIS) Page 3 of 17


MCC: Mechanical Completion Certificate MPCS: Mechanical Performance and Close-out System MSAER: Mandatory Saudi Aramco Engineering Requirements Non-Conformities Escalation: A structured mechanism to progressively escalate pending quality and technical deficiencies to the concerned management. NCR: Non Conformance Report (Issued by Saudi Aramco through SAP QM). Project Quality Manager (PQM): The Senior Inspection Representative responsible for coordinating all inspection requirements on behalf of Inspection Department with SAPMT throughout all project phases, from Project Proposal up to Mechanical completion. QMIS: Quality Management Information System (also known as electronic Inspection Logbook). Repeat Violation: A non-compliance of the same MSAER, project specifications or standard drawings in the same activity area, that occurred more than once within six (6) months. SAPMT: Saudi Aramco Project Management Team SAP QM: Systems, Applications and Products in Data Processing-Quality Module Technical Deficiencies: Non-compliance to any MSAER or project specifications Worksheet: Mechanism for reporting major violations or escalating pending valid NCRs as stipulated in this Procedure. 6

Violations Definitions MAJOR (If any one of the following applies) 1)

Violations of company standards including GIs that put the quality and integrity of the facility including its workers and equipment at risk.

2)

Actions that violate the Corporate values by submitting forged items & counterfeit materials.

MODERATE (If any one of the following applies) 1)

Any violation to MSAER, project specifications and approved IFC drawings that if the next phase of work (critical path) is continued without correcting the violation,

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the structural integrity of the next phase will be jeopardized. Such violation if not corrected in a timely manner will lead to more severe damage or complexity. 2)

Any violation to Schedule Q. Commentary Note: Minor violations related to Schedule Q listed in Appendix D are excluded from this definition.

3)

If the violation will be categorized ‘YES’ item as defined in GI-0002.710 during the partial MCC stage.

MINOR (If any one of the following applies)

7

1)

Any violation to SAES, SAMSS, project specifications and approved IFC drawings but the next phase of work is not dependent on the correction of the violation.

2)

If the violation will be categorized as ‘NO’ item as defined in GI-0002.710 during the partial MCC stage.

Instructions 7.1

Quality Issues Notification 7.1.1

Quality or technical deficiencies shall be reported in a timely manner through QMIS for LBE, or SAP QM (NCR or WS) depending on the identified violation as defined in Section 6.

7.1.2

Potential non-conforming materials, products or work shall be proactively highlighted through the QMIS to avoid re-work.

7.1.3

A letter of concern signed by the PID Superintendent shall be addressed to the Department Head of the MCC/PMCC Chairman whenever MCC/PMCCs are approved in the MPCS without ID signature due to converted and unresolved ‘YES’ items for other Organizations. This letter shall be copied to ID and PMT Department Managers.

7.1.4

A letter of concern signed by the ID Manager shall also be addressed to the Manager of the MCC/PMCC Chairman whenever MCC/PMCCs are approved in the MPCS system and ID’s ‘YES’ items are converted to ‘NO’ without obtaining ID’s agreement. This letter shall be copied to Proponent VP, ES VP and PM VP.

7.1.5

A letter of concern signed by the ES Chief Engineer shall be addressed to the Admin Area head of the MCC/PMCC Chairman whenever a Facility is commissioned without Inspection Department’s Page 5 of 17


review/signature on the MCC/PMCC. This letter shall be copied to Internal Auditing, ES VP and PM VP.

7.2

7.1.6

Starting a project which excludes ANY Mandatory Saudi Aramco Engineering Requirement (MSAER), without securing the required waiver approved by applicable management level authority shall be issued a Worksheet.

7.1.7

Initiators, approvers and other interested parties of quality issue notifications shall be in accordance with Appendix E, “Table of Responsibilities for Quality Issue Notification.”

7.1.8

Third Delinquent Worksheet (DWS3) shall be copied to Internal Auditing for their follow-up action.

Agreed Completion Date (ACD) for LBEs, NCRs and Worksheets 7.2.1

PID PQM, SAPMT Senior Project Engineer or Lead Project Engineer and the Contractor Quality Representative are responsible for determining the initial Agreed Completion Date (ACD) for LBEs, NCRs and Worksheets.

7.2.2

When no agreement on the ACD of any type/category of Quality Notification could be reached, the ACD shall be decided mutually by the next level of authority from ID and PMT, depending on the Quality Notification category.

7.2.3

If an extension of ACD is justified and mutually agreed by ID & PMT representatives, one-time basis approval of ACD extension is allowed. If no agreement of the new ACD is reached by the ID and PMT initiators and approvers, the ACD shall be established by the next higher signature level(s) per the below matrix. Quality Notification Type

ID Rep

PMT Rep

Contractor’s Internal NCR

ID Field Supvr

PMT Project Engineer

Logbook Entry (LBE)

ID Field Supvr

PMT Project Engineer

NCR

ID Unit Supervisor

PMT Sr. Project Engineer

Worksheet

ID PQM

PMT Project Manager

In case a conflict on establishing the ACD continues, the PMT Department Manager shall make the final decision.

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7.3

7.4

7.5

Handling of Contractor’s Internal NCR 7.3.1

Saudi Aramco strongly encourages all Contractors to take advantage of all opportunities to enhance their quality management system implementation and to fully utilize their internal QA/QC system towards a high project quality delivery.

7.3.2

ID shall initiate escalation if a Contractor does not act to correct quality/technical non compliances within the mutually agreed ACD.

7.3.3

To encourage Contractors’ QC Team to implement their internal quality management system effectively, the Contractors’ recommended completion date shall be accepted, unless found unreasonable by PMT project engineer and the ID Field Supervisor.

7.3.4

When the Contractor’s QC personnel report and document a quality non-compliance, ID shall follow the work process per Appendix B, “Contractor’s Internal NCR.”

7.3.5

When an Internal NCR has been issued by the Contractor’s QC, Saudi Aramco quality notification shall be recorded by PID in the “General Comments” category of the QMIS, for the purpose of Lessons Learned collection. The QMIS entry shall be closed when the internal NCR is completed or when escalated to SA NCR due to non-compliance within the ACD.

Clarifications to Appendix D “Examples of Violations and Escalation Steps” 7.4.1

Clearance of “Unavailability of approved Contractor QA Manager or Contractor QC Manager" in Appendix D shall be based on actual mobilization at the project site of the approved Contractor QA Manager or QC Manager and not just submission or approval of resumes’. Absence of an already approved and mobilized Contractor QA/QC Manager, due to verified emergency leave could be exempted by the PQM provided that the leave of absence shall not be more than seven (7) calendar days without an approved replacement.

7.4.2

Clearance of – “Insufficient QC Manpower (Deficiency > 10% of Plan)” in Appendix D shall also be based on actual mobilization of the approved Contractor QC personnel at the project site, and not just submission or approval of resumes’.

Non-Conformities Escalation Process 7.5.1

Escalation processes shall be in accordance with Appendix C, “Quality Issues Escalation Matrix”. Page 7 of 17


7.5.2

Logbook Entries (LBEs) shall be made for deficiencies defined as Minor. LBEs shall be made through the QMIS or Manual logbook. (Manual logbook entry shall be done only in exceptional cases and shall have prior approval by the relevant Division Head.

7.5.3

Repeat of Moderate or Major violation within six (6) months will result to a Quality Notification starting at the next higher level of Violation Category and Notification. Repeat of a Minor violation due to negligence shall be considered as Moderate violation.

7.5.4

Repeated Internal Non-Conformance Report (INCR) within six (6) months shall be, as in Appendix B, “Contractor’s Internal NCR”:

7.5.5

8

7.5.4.1

Escalated to SA NCR if the Contractor failed to Report the Repeated INCR

7.5.4.2

Escalated to Violation-after-the-fact Entry in the QMIS if the contractor has detected and reported the Repeated INCR

Valid NCR shall be escalated to a Worksheet (WS) when any of the following applies: 7.5.5.1

Valid NCR is not corrected or completed on the ACD (including the extension period, if extension is approved)

7.5.5.2

Valid NCR issued by Inspection Department is not approved by SAPMT within five (5) working days

7.5.6

A Worksheet that was not resolved on or before the ACD, including the approved extension period (if extension is approved), shall be escalated to Delinquent Worksheet, after discussing and notifying the relevant PMT representative.

7.5.7

Once the project reaches its MCC stage, all open LBEs, NCRs, Worksheets and DWS shall be transferred to MPCS. Items required for start-up or impacting safety are to be marked as ‘YES’ Items. All other items shall be designated as ‘No’ Items.

Responsibilities 8.1

Project Inspection Division Head 8.1.1

Reviews and approves or rejects PMT request to extend ACD for Worksheets Page 8 of 17


8.2

8.3

8.4

8.1.2

Approves Worksheets issued by the PQM/Sr. Supervisor

8.1.3

Initiates issuance of Delinquent Worksheet (DWS1)

8.1.4

Reviews and approves or rejects the deletion of SAP notifications

Project Quality Manager (PQM) or Senior Supervisor 8.2.1

PQM may initiate issuance of Non-Conformance Reports (NCRs) in lieu of Field Supervisor

8.2.2

Initiates issuance of Worksheet (WS)

8.2.3

Reviews and may grant one-time approval of ACD extension prior to escalation of valid NCR

8.2.4

Decides cases of violations not clearly defined in Section 6 and not listed in Appendix D “Examples of Violations and Escalation Steps”

8.2.5

Performs quality roles and responsibilities defined in this SAEP, GI-0400.001 “Quality Management Roles and Responsibilities” and GI-0002.710 “Mechanical Completion and Performance Acceptance of Facilities”

Project Inspector or Field Supervisor 8.3.1

Highlights to SAPMT any potential non-conforming material, product or work through the QMIS to avoid re-work.

8.3.2

Reports in a timely manner any quality or technical deficiency through the QMIS or SAP QM (LBE or NCR) depending on the committed violations as defined in Section 6 and categorized in Appendix C, “Quality Issues Escalation Matrix”

8.3.3

Field Supervisor may initiate issuance of Non-Conformance Reports (NCRs) in lieu of Project Quality Manager (PQM)

SAPMT 8.4.1

Ensures project full compliance with SAEP-302, “Instructions for Obtaining a Waiver of a Mandatory Saudi Aramco Engineering Requirement”

8.4.2

Approves valid NCRs initiated by Inspection Department within five (5) working days

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8.4.3

9

Performs quality roles and responsibilities defined in this SAEP, GI-0400.001 “Quality Management Roles and Responsibilities” and GI-0002.710 “Mechanical Completion and Performance Acceptance of Facilities”

Cancelled Quality Notifications Submitted quality notifications in SAP QM shall not be marked for deletion without proper justification approved by PID Division Head. The approved justification shall be attached in the quality notification being “marked for deletion”.

28 January 2012 17 March 2013

Revision Summary New Saudi Aramco Engineering Procedure. Minor revision to provide clarification on selected sections.

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Appendix A - Quality Issues Reporting Process

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Appendix B – Contractor’s Internal NCR Contractor’s INCR

Moderate Or Major Violation?

PID to Initially record INCR in the General Comments of QMIS, marked as “For Info”

Repeat Minor INCR? w/in 6 months

No

No

Yes Yes

No

Repeat INCR? w/in 6 Months

One-time extension granted?

No

Reported by Contractor?

Completed on Extension Date?

No

Completed on ACD? Yes

Yes

Yes

No

No

Yes

Yes

Change QMIS entry to “Violation-after-the fact”

Completed on ACD?

Yes

No One-time extension granted?

Yes

Completed on Extension date?

Yes

No No Escalate INCR into SA-NCR, then Close INCR & QMIS

Follow the Quality Issue Reporting Process

Close INCR & QMIS

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Appendix C - Quality Issues Escalation Matrix Violation Type

1st Notification

1

ESCALATION STAGES 2 3 4

5

Minor

LBE

NCR

WS

DWS1

DWS2

DWS3

Moderate

NCR

WS

DWS1

DWS2

DWS3

-

Major

WS

DWS1

DWS2

DWS3

-

-

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Appendix D - Examples of Violations and Escalation Steps ESCALATION MATRIX S/N

Sample Violation

Recommended Phase for Proactive Notification

Violation Category

1.

Forged Quality Documents

Job X/Kick-off/Weekly QC Meetings

Major

2.

Procurement and/or Installation of counterfeit materials classified as inspectable per SAEP-1151 Note: For non-inspectable materials, PQM decides on the initial Violation Category


Major

3.

Starting a project which excludes ANY Mandatory Saudi Aramco Engineering Requirement (MSAER), without securing the required waiver approved by applicable management level authority.

Job X/Kick-off Meetings

Major

4.

Unavailability of approved Contractor QA Manager or Contractor QC Manager

Job X/Kick-off Meetings/ Weekly QC Meetings

Moderate

5.

Commencing of Special Process activity as specified in Schedule Q without approved procedures/personnel


Moderate

6.

Concrete or Asphalt placement without pre-approval of the batching plant or mix design

Kick off Meetings/Weekly QC meetings

Moderate

7.

Use of non-approved third party service providers


Moderate

8.

Starting work without IFC Drawings or not submitting required Quality Documents as per Schedule “Q” Note: Categorization is PQM discretion


Moderate Minor

9.

Placing RVL/Inspectable materials and equipment with unapproved source


Moderate

10.

Carrying out modification work on accepted systems (PROCESS-RELATED) without SA approval


Moderate

11.

Preservation and Storage of equipment and materials classified as ‘Inspectable’ per SAEP-1151 that are not in accordance with the approved quality plan and schedule “Q” Note: Categorization is PQM Discretion


Moderate Minor

12.

Contractor’s Internal NCR not resolved at the approved completion date

Kick off Meetings / Weekly QC meetings

Moderate

13.

Failure of the Contractor to control and implement the quality requirements of its batch plants, subcontractors and other service providers as required per Schedule Q. (e.g., Not assigning his own QC inspectors at the manufacturer and service provider locations per Schedule Q, and relying only on the In-House QC)


Moderate

14.

Contractor failure to conduct complete quality system audits per Schedule Q requirements


Moderate

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Document Responsibility: Inspection Engineering Standards Committee SAEP-381 Issue Date: 17 March 2013 Next Planned Update: 28 January 2017 Project Quality Issues Escalation Process ESCALATION MATRIX Recommended Phase for Proactive Notification

Violation Category

15.

Contractor failure to conduct the 6-months Management Review Meetings and submit the results/recommendations to Saudi Aramco at the prescribed time


Moderate

16.

Insufficient QC Manpower (Deficiency > 10% of Plan)

Job X / Kick-off Meetings/ Weekly QC Meetings

Moderate

17.

Contractor failure to perform/implement inspection per approved ITP without adequate notification or justification (HOLD POINT activities)


Moderate

18.

Contractor failure to perform/implement inspection per approved ITP without adequate notification or justification (Witness Point activities)


Minor

19.

QC Personnel on part time basis, either routinely performing non-QC functions or covering QC jobs in a different geographical location without prior approval of the ID Area Field Supervisor

Job X / Kick-off / Weekly QC Meetings

Minor

20.

Insufficient QC Manpower (Deficiency < 10% of Plan)

Job X / Kick-off Meetings

Minor

21.

Failure to submit, incomplete, poor quality or late submittal of the required weekly or monthly deliverables as required by Schedule Q


Minor

22.

Poor or incomplete quality submittals or documentations Note: PQM has the option to increase this category as MAJOR if the submittals are for critical activities such as hydro test package of oil & gas facilities


Minor

23.

Poor, late or incomplete submission of the required weekly or monthly deliverables/documentations as required by Schedule Q Note: PQM has the option to increase this category as MAJOR if the submittals are for critical activities such as hydro test package of oil & gas facilities


Minor

24.

Failure to submit the required weekly or monthly deliverables/documentations as required by Schedule Q Note: PQM has the option to increase this category as MAJOR if the submittals are for critical activities such as hydro test package of oil & gas facilities


Minor

S/N

Sample Violation

Legend: L = e-Log Book entry N = Non-Conformance Report (Q8 Notification) W = Worksheet (Q9 Notification)

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Appendix E - Table of Responsibilities for Quality Issue Notification Responsible NCR

Initiator / Issuer  Field Supervisor/ PQM

Approver  Project Engineer / Sr. Project Engineer

Recipient / Addressed To  PM Representative

Interested/Copied Parties  Division Head, PID  Division Head, PM  Project Manager  Proponent Site Rep.

Worksheet

 PQM/ID Sr. Supervisor

 Division Head, PID

 Department Manager, PM

 General Manager, PM  Sr. Project Engineer  Department Manager, ID  Division Head, PM  Proponent Site Rep.

DWS1

 PID Division Head

 Department Manager, ID

 General Manager, PM

 Vice President, PM  Vice President, ES  Chief Engineer  Project Manager  Dept. Managers, PMT & Proponent

DWS2

 ID Manager

 Chief Engineer

 Vice President, PM

 Vice President, ES  General Manager, PM  General Auditor  Dept. Managers, PMT & Proponent  PID Division Head

DWS3

 Chief Engineer

 Vice President, ES

 Sr. Vice President, E&PM

 Vice President, PM  General Manager, PMT  General Auditor  Project Manager  ID Manager  Dept. Managers, PMT & Proponent

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Appendix F - Index 1

Scope………………………………………………………………………..…………… 2

2

Purpose……………………………………………………..…………………………… 2

3

Conflicts and Deviations………………………..……………………………………… 2

4

Applicable Documents……………………………………………………………..…… 3

5

Definitions……………………………………………………………………...………… 3

6

Violations Definitions…………………………………………………………………… 4

7

Instructions……………………………………………………….……………………… 5

8

Responsibilities…………………………………………….…………………………… 8

9

Cancelled Quality Notifications………………….…………………………………… 10

Appendix A – Quality Issues Reporting Process………………………………………... 11 Appendix B – Contractor’s Internal NCR………………………………………………… 12 Appendix C – Quality Issues Escalation Matrix…………………………………………. 13 Appendix D – Examples of Violations and Escalation Steps……………….……….…. 14 Appendix E –Responsibilities For Quality Issue Notification……………….……….…. 16 Appendix F – Index………………………………………………………………………… 17

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SAEP-381

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