Third Party Inspection (TPI)

Third Party Inspection refers to independent inspection services that are provided by
inspection agencies. This article supplies you with information about TPI definition,
TPI companies and also provides you with third party independent
inspection procedures for different fix, rotary, electrical and instrumental equipment.

In purchasing and procurement projects the sellers and vendors are first parties. The
second parties are purchasers or buyers.

First party inspection refers to quality control activities that are done by equipment
vendors or sellers.

Second party inspection refers to inspection activities that are done by equipment
buyers or purchasers.

In fact first party is seller and second party is buyer. So when you say second party
inspection, it means that an inspection and quality control activities that are done by a
buyer and when you say first party inspection, it means that an inspection and quality
check that are done by a vendor in its construction shop.

These quality controls and inspections are done based on approved design documents,
Purchase Order and International standards.

The Third Party Inspection refers to independent inspection activities that are done by
a Third Party Inspection Agency either hired by a buyer or seller but generally hired
by the buyer.

ISO 1720 Definition for Third Party Inspection Services

The ISO 1720; - Requirements for the operation of various types of bodies performing
inspection- specifies characteristic of these kinds of inspection agencies.

Based on these requirements, these agencies must be impartial and independent in

their inspection activities and in their inspection reports and results.

All interested companies such as traders, buyers, sellers, engineering companies,

construction companies must have access to the services of these inspection agencies.
The impartial and independence conditions are very important factors for third party
Inspection agencies. In this direction ISO 17020 does not allow these companies to be
participated or involved in any procurement, purchasing, construction, installation and
even design activities.

They must only provide third party inspection services and not anything else.

Based definition of the ISO 17020, these inspection companies are category an
inspection organization. Based on this standard there are two more inspection
organizations that are not independent.

A category B inspection organization is an inspection department in a large-scale

company that is involved in the design, procurement, construction, installation, etc.
and this inspection department provides inspection services to its own company.

Normally a category B inspection organization is a quality control department in an

engineering or EPC company. This department assists company in procurement and
purchasing projects and makes inspections on the equipment and materials that are
purchased by own company.

Example for Third Party Inspection Services in Oil and Gas Industry

Suggest an EPC company has a contract with an oil company for design, procurement,
and construction of a desalting plant. Then the quality control department of this EPC
Company makes inspection on the equipment and material that have been ordered by
EPC contractor for this desalting plant. So this is what we name second party
inspection and based the ISO 17020 is category B type inspection.

This inspection will not be enough by end-user or in this example oil company. The
oil company will hire an independent inspection agency or in other word a category
an inspection company to conduct inspection on the procured equipment and material
by EPC Company.

Sometimes the end-user or “oil company in this example” decides not to hire an
independent inspection company by itself but mandates that the EPC Company to hire
an independent inspection agency that is in their approved list.

Different projects have different procedures for handling inspection activities in their
procurement projects. Sometimes the procured equipment is inspected by both parties
i.e. by EPC contractor quality control as well as by end-user third party inspection
agency. In other word equipment are inspected by category A and category B
inspection organizations.

Based on ISO 17020 definition, there is also category C inspection organizations.

These inspection organizations are not too much. It refer to an inspection department
of engineering company that provide services to its own procurement and purchasing
projects as well as to other engineering companies. Similar to the category B
inspection organizations these companies also cannot be independent.

There are lots of scopes of work for Category an inspection agencies or in other word
in third party inspection companies. One of them is Third Party Quality
Inspection that refers to quality part of work. In this part an inspection agency checks
and makes sure that the quality of the commodity is as the same of purchase order
specification.

The scope of work is determined by buyers and purchasers. Some of them require only
a pre-shipment inspection and some other may mandate more stringent scope and ask
their third party inspection agency to witness important tests and inspections such as
material certificate review, material identification, welding inspection, NDE test
review, dimensional control, hydro-static testing, mechanical running testing,
performance testing, painting inspection, packing and marking inspection and loading
inspection.

The scope of work for inspection and testing is defined through inspection and test
plan (ITP). This is very important document in purchasing and procurement projects.
This document identifies duty and task of each parties regarding inspection during
manufacturing and construction process.

In giant project it is necessary that an inspection company or a category an inspection

organization to expedite inspection activities. It is duty of inspection agency to check
that to see if all inspections and tests are done with satisfactory results before issuing
of inspection release notes. But in no case an inspection agency must expedite
procurement work such as reporting to client about percentage of manufacturing
progress or etc. These are not task of inspection agency; this must be done by EPC
contractor expeditor engineer or technician.

This checking must be done based approved inspection and test plan. The inspection
agency can use the ITP as check list to see if all inspection completed and their
inspection visit reports are available.

It is best practice that an inspection releases note to be referred to the purchase order
number as well as to the inspection and test plan document number. The quantity also
must be stated in release note if the commodity is going to be shipped partially.

It is responsibility of the category an inspection organization or inspection agency to

issue an inspection visit report after each visit in manufacturer shop. The inspection
date must be notified to inspection agency normally 7 working days in advance. It is
responsibility of the vendor to notify the inspector agency. The quality control team
of a manufacturer must check inspection and test plan frequently and when they see
they have reached to specific stage of construction that need an inspection, then must
notify inspector for its visit.

The communication channel between inspection agency, vendor and client must be
set-up. This normally is done in Pre-Inspection meeting or Pre-Production meeting.
In this meeting that is conducted before commencement of project, all parties will be
attended in the meeting and discuss about project coordination and communication.

All parties are responsible to act and communicate based what is agreed and confirmed
in the meeting and Minute of Meeting (MOM) will be based for coming actions.

Raw material inspection must be done based purchase order specification. The third
party material stamp inspection is another important task of inspection agencies. They
check material conformity based on BSEN 10204 requirements for 3.1 and 3.2
certifications.

A 3.1 material certificate refers to the certificate that is issued by a material

manufacturer but a 3.2 certificate is material certificate that is issued by material
manufacturer but confirmed and approved by independent inspection agency. It is
necessary that inspection agency to witness important test during of manufacturing
process for confirming such certificates.