BECHTEL LIMITED

QUALITY ASSURANCE DEPARTMENT

PROCEDURE NUMBER QAP-306

INTERNAL QUALITY AUDITS

1 Oct 97 Revised to include requirements for NDEU JJL MT DB

0 Sep 89 Department Implementation ABH DB DB

REV DATE REVISION BY CHKD APPR

THIS IS A CONTROLLED COPY. IF PRINTED, THE HARD COPY WILL BECOME NON-CONTROLLED

Procedure Number QAP-306 Page 1 of 9

 CONTENTS

1.0 PURPOSE.....................................................................................................................................................3

2.0 SCOPE..........................................................................................................................................................3

3.0 REFERENCES...............................................................................................................................................
3.1 NATIONAL AND INTERNATIONAL STANDARDS............................................................................................
3.2 MANAGEMENT DOCUMENTS......................................................................................................................
3.3 QUALITY SYSTEM PROCEDURES................................................................................................................
4.0 DEFINITIONS...............................................................................................................................................

5.0 RESPONSIBILITIES....................................................................................................................................

6.0 INSTRUCTIONS............................................................................................................................................
6.1 QUALITY AUDIT SCHEDULING...................................................................................................................
6.2 PREPARATION AND PLANNING....................................................................................................................
6.3 PRE-AUDIT MEETING.................................................................................................................................
6.4 CONDUCTING THE AUDIT...........................................................................................................................
6.5 POST-AUDIT MEETING...............................................................................................................................
6.6 AUDIT REPORTING.....................................................................................................................................
6.7 FOLLOWING UP AND CLOSING OUT AUDITS...............................................................................................

7.0 ATTACHMENTS.....................................................................................................................................8

Procedure Number QAP-306 Page 2 of 9

1.0 PURPOSE

1.1 The purpose of this procedure is to define when, how and by whom internal Quality
Audits shall be performed.

2.0 SCOPE

2.1 This procedure applies to all departments covered by the Company Quality System.

2.2 This procedure shall be applied to the Company Quality System.

2.3 Project Quality Systems shall be audited in accordance with the requirements of
Standard Project Procedure, GPP 7EG 302 - Quality System Audits.

3.0 REFERENCES

3.1 NATIONAL AND INTERNATIONAL STANDARDS

ISO 9001 : 1987 Quality systems -

Model for Quality Assurance in Design/Development, Production, Installation and
Servicing.

3.2 MANAGEMENT DOCUMENTS

QAP-101 Quality Manual

3.3 QUALITY SYSTEM PROCEDURES

QAP-217 Internal Quality Audits

3.4 Standard Project Procedures

GPP 7EG 302 - Quality System Audits

4.0 DEFINITIONS

Company - Bechtel Limited and the EAMS Execution Unit

Internal Quality Audit - The independent documented examination of the quality

related activities on a project, or within a department, carried out by Quality
Assurance personnel to verify the implementation and effectiveness of the Company
Quality System

CAR - Corrective Action Request. A form for requesting corrective action

following the identification of a deficiency at the audit stage, and recording the action
taken and verification that the action is satisfactory.

CMAS - Company Master Audit Schedule. A comprehensive annual schedule of the

audit requirements sufficient to cover the Company Quality Assurance System.

Procedure Number QAP-306 Page 3 of 9

 PAS - Project Audit Schedule. A schedule of Audits sufficient to cover the entire
project Quality Assurance System.

CQA - Company Quality Audit.

QAC - Quality Audit Checklist.

PQAM - Project Quality Assurance Manager.

In the New Delhi Execution Unit this shall be the senior QA representative
appointed to the Project.

MQA - Manager of Quality Assurance. Taken here to mean the Manager or his
nominated representative. In the New Delhi Execution Unit the
nominated representative is the Quality Assurance Manager for that Unit.

Minor Deficiency - an isolated or potential deficiency that will have no immediate

adverse effect on the quality of the work.

Major Deficiency - a deficiency which if not corrected will have a significantly

adverse effect on the quality of the work.

5.0 RESPONSIBILITIES

5.1 The MQA shall be responsible for the following aspects of Company Quality Audits:

a) Preparing, updating and controlling the CMAS.

b) Notifying the Auditee(s) of the audit date, scope and agenda.
c) Preparing audit questionnaires and checklists.
d) Conducting.
e) Follow up audits.
f) Ensuring all Quality Audits are in accordance with this procedure.

5.2 The PQAM shall be responsible for 5.1 a-e above with respect to project Audits with
the exception that instead of the CMAS the Project Audit Schedule shall be prepared,
updated and controlled, and that the Audits will be performed in accordance with
GPP 7EG 302.

6.0 INSTRUCTIONS

6.1 QUALITY AUDIT SCHEDULING

6.1.1 The MQA shall ensure that the following occur:-

The Company Master Audit Schedule (CMAS) covers the audit requirements of the
complete company quality system.

Reference is made to existing Project Audit Schedules when generating the CMAS to
avoid duplicating audits.

Procedure Number QAP-306 Page 4 of 9

 Company Quality Audits shall be numbered sequentially with a preface of CQA on
the front sheet and shall include at least one Project Quality Audit except in the areas
of training and proposal review where there may be no project audits.
6.1.2 The PQAM shall ensure that the following occur:-

Project Audit Schedules shall be generated by reference to the CMAS to prevent

duplication of audits.

Project Quality Audits shall use a project specific numbering system such as three
letters followed by a sequential number (ie DUB-01 for a Dubai project).

6.2 PREPARATION AND PLANNING

6.2.1 The audit dates and details will be confirmed by memo with the auditee(s) no later
than five working days before the audit. A typical confirmatory memo and basis are
given in Attachments 1 and 2.

6.2.2 The details are to at least contain:

a) scope
b) areas to be examined
c) agenda
d) reference documents
e) names and details of audit team personnel
f) time and modes of arrival.

6.2.3 Where a preliminary review is considered desirable due to a large audit scope a
preliminary questionnaire will be sent to the auditee(s) for completion and return
prior to the date of audit commencement.

6.2.4 The MQA/PQAM will, for corporate/project audits respectively, either act as, or
nominate an Audit Team Leader.

6.2.5 The Audit team Leader shall ensure preparation of the quality audit checklist (QAC)
based on the following:-

a) scope
b) areas to be examined
c) agenda
d) reference documents
e) where applicable, questionnaire responses.

See Attachment 3 for a typical Quality Audit Checklist.

6.3 PRE-AUDIT MEETING

A brief pre-audit meeting shall be held at which the Auditor(s) and the Auditee(s)
shall agree on the following:

Procedure Number QAP-306 Page 5 of 9

 a) sequence of activities and functions to be audited
b) the time, approximate duration and venue for the post-audit meeting.

The Audit Team Leader is responsible for ensuring that notes of the meeting are
prepared, and attendance register - see attachment 4, is signed by the attending
members.

6.4 CONDUCTING THE AUDIT

6.4.1 The auditor(s) shall conduct the audit of each item on the QAC by interviews and
examination of objective evidence, such as documents. The QAC may be extended if
additional questions become necessary to clarify the degree of conformance.

6.4.2 All original notes shall be made on a copy of the QAC. Details of the document
examined, giving file, number, section, page, paragraph and revision number and
whether an interview was carried out shall be entered in the 'REF/VERIFICATION'
column.

6.4.3 The 'COMPLIANCE - YES/NO' column shall be used to record whether the
information obtained is either compliant or not compliant with the requirement.
Wherever possible a 'NO' result shall be agreed at the time it is found by the
auditor(s)/auditee(s). Other entries in this column such as 'N/A' for 'Not Applicable',
and hyphens, shall be explained in the 'COMMENTS/REMARKS' column.

6.4.4 The 'COMMENTS/REMARKS' column shall record all findings, agreements and
deficiencies, including those which do not merit Corrective Action Requests (CARs)
and explain entries in the 'COMPLIANCE' column.

6.4.5 After the investigative phase of the audit the deficiencies will be separated into major
and minor. Corrective Action Reports shall be raised by the audit team for each
major deficiency (see Attachment 5 for a sample CAR).

6.4.6 An example of a major deficiency would be non-compliance with the procedure for
checking and approval of key engineering deliverables.

6.4.7 An example of a minor deficiency would be an isolated non key drawing that has not
been signed off as approved.

6.4.8 Where possible deficiencies will be grouped under common subject headings. The
CAR number shall be entered onto the CAR column on the QAC.

6.4.9 The CAR's shall be numbered in the following format XX-YY where XX is the audit
number and YY is the sequential CAR number. A suffix in the form XX-YY/1 shall
be allocated for CAR's in follow up audits.

6.4.10 Each member of the audit team shall prepare a summary of his findings and submit
these to the team leader for review prior to the post-audit meeting.

6.5 POST-AUDIT MEETING

Procedure Number QAP-306 Page 6 of 9

 A post-audit meeting shall be convened by the Audit Team leader and attended by the
auditees and others present at the pre-audit meeting. At the meeting the auditor(s)
shall:

a) Give an objective summary of the audit.

b) Discuss audit results, presenting a copy of any CARs to ensure that they are
understood by the auditees.

c) Agree any CARs together with the responsibilities and target dates for close-out
and follow-up audits, obtain the signature of the auditee(s) on each CAR and
provide the auditee(s) with the originals of the CARs.

d) In the event of disagreement over a CAR then the auditee shall be permitted to
submit documentary evidence relating to the validity of the CAR. This
evidence shall be reviewed with the auditee and the auditee's supervisor for
resolution. Where it is agreed that the CAR is valid, the supervisor shall sign
the agreed CAR to signify his agreement. Where it is agreed that the CAR is
not valid it shall be withdrawn.

e) Discuss the minor deficiencies and agree an action and time limit for resolution.
Follow up action to take place during the next audit. The agreed actions can be
documented in a Corrective Action Plan.

f) Agree the intended date for the audit report - see 6.6.1 below.

g) Thank all the Auditees for their co-operation.

6.6 AUDIT REPORTING

6.6.1 The Audit Team Leader shall prepare the audit report which shall be issued to the
MQA within an agreed timescale after the post-audit meeting.

6.6.2 The format of the report will be as follows:

Quality Audit Report (QAR) form - Attachment 6. This form shall give an overall
summary of the audit to describe its purpose, basis and audit results including the
number and brief details of CAR forms raised. This form shall be signed and dated
by the auditors.

A narrative report with sections as follows: Quality Audit Introduction, Major

Deficiencies, Other Deficiencies, Recommendations, Constraints, Follow-up.

CARs and QAC

For small projects, or audits with limited scope, and with the agreement of the MQA,
the narrative report may be omitted.

Procedure Number QAP-306 Page 7 of 9

6.6.3 The Audit Report shall be distributed to the MQA and the auditees. The QA group
shall retain the original QAC and audit notes which shall be filed under the audit
sequence number as part of the QA Audit Records.

6.7 FOLLOWING UP AND CLOSING OUT AUDITS

6.7.1 Corrective Action Requests (CAR's) shall be recorded on the Quality Audit Action
Schedule (QAAS) form (see Attachment 7) for the audit.

6.7.2 The Auditee responsible for the corrective action on a CAR shall complete boxes 11-
12 of the CAR form and return the original to the QA Group/MQA.

6.7.3 In the event of non-return of a CAR within the agreed date, then the matter shall be
raised with the auditee and auditee's supervisor. Reasons for the non-compliance with
the close-out schedule shall be documented together with a new agreed schedule
which shall be entered on the CAR and QAAS.

6.7.4 Follow-up to verify the implementation and effectiveness of the corrective actions
shall be carried out by the Audit Team Leader or his nominee within the agreed
period. If the action taken has been effective in correcting the deficiency and
preventing recurrence, the CAR, box 13, shall be completed, referencing
documentary evidence reviewed and signing and dating the form.

6.7.5 If the corrective action has not been effective in correcting the deficiency and
preventing a recurrence of the deficiency, then a new CAR shall be raised,
referencing the original CAR with the new CAR number recorded on the original. If
the new CAR is not closed-out at the second follow-up then the MQA shall review
the matter with Company Management for resolution which shall be recorded.

6.7.6 The QAAS shall be updated as the CARs are closed-out and cross-reference made to
any new CARs raised.

6.7.7 The Quality Audit Log - see attachment 8, shall be updated on close-out of all CARs
raised on an audit including follow-up audits.

6.7.8 Copies of follow-up audit reports and closed-out CARs shall be distributed by the
MQA as for initial audit reports.

7.0 ATTACHMENTS

1. Audit Memo
2. Quality Audit Basis
3. Quality Audit Checklist
4. Audit Meeting Attendance Form
Procedure Number QAP-306 Page 8 of 9
5. Corrective Action Request (CAR)
6. Quality Audit Report
7. Quality Audit Action Schedule
8. Quality AuditLog

Procedure Number QAP-306 Page 9 of 9

Bechtel Memorandum

To: File No.:

Date:

From:
Copies To:

Of:

At: Ext:

Subject:

This memo confirms the arrangements for a Quality Audit on (Day, Date*).

Attached is the Quality Audit Basis defining the scope, areas to be examined, agenda,
reference documents and auditors.

The pre-audit meeting will be held at (time, location). On completion of the audit, a post-
audit meeting will be held and a date agreed for submission of the Audit Report.

To enable the audit to be conducted with the minimum of disruption to our normal work
programme, please arrange for suitable representation and assistance during the audit.

Regards,

(Auditor Signature)

Attachment 1

QUALITY AUDIT BASIS

 AUDIT No____________

Scope: Weight Control Activity

1.0 Status, scope and implementation of project procedures

2.0 Implementation of estimating bulk factors
3.0 Application of weight control schedules
4.0 Traceability of weight control data
5.0 Weight control requirements in requisitions

Areas to be examined: Weight Control Group

Other Engineering Disciplines

Agenda: Pre-audit meeting - 15 minutes

Audit interviews - sequence to be agreed in pre-audit meeting
Post-audit meeting - 30 minutes

Reference Documents: Project Quality Plan - Rev. 2

Project Procedures AB/CDE/1234 Rev. 1

Audit Team Leader: A.N.O.

Team Member: A.B.C.

Additional Information: Quality audit checklist will take note of pre-audit questionnaire
responses

Attachment 2
 QUALITY AUDIT CHECK LIST

Quality System Audit No

Procedure: QAP-306

Item Requirement Verification Comments/Recommendations

1 Audit Process

Attachment 3
Audit Meeting - Attendance Form

Audit Ref: Pre-Audit Meeting: Post Audit Meeting:

Audit Dates:

Auditee: Auditor:

Auditee Representatives:

Name Position Pre-Audit Meeting Post Audit Meeting

Other Attendees:

Name Organisation/Position Pre-Audit Meeting Post Audit Meeting

Attachment 4
 Corrective Action Request (CAR)

Project/Job No: Dept/Discp/Co: Audit No:

Audit Date:
Car No:
Auditor: Dept/Disc/Co Reps: Checklist Item:
ISO 9000 Ref: Clause

Controlling Document:

Finding:

Signature (Auditor): Signature (Dept/Disc/Co Rep):

Corrective Action Recommendation:

Schedule Completion Date: Signature(Dept/Disc/Co Rep):

Corrective Action Taken:

Date Completed: Signature(Dept/Disc/Co Rep):

Action Taken to Prevent Recurrence:

Date Completed: Signature(Dept/Disc/Co Rep):

Corrective Action Verified by QA.

CAR Closed Out Date: Signature (auditor):

Attachment 5
 Quality System Audit Report
Project Title: Audit No: Auditors:

Audit Date:
Project No:

Department/Discipline/Company Department/Discipline/ Company Representatives:

Audited:

Audit Scope:

Areas Examined:

Reference Documents: Please refer to Report Narrative

Summary

Distribution: Prepared By:

Date:
Signed:

Attachment 6
 QUALITY AUDIT ACTION SCHEDULE (QAAS)

AUDIT CARs SCHEDULED ACTUAL REMARKS

CLOSE-OUT CLOSE-OUT
DATE DATE

Attachment 7
 QUALITY AUDIT LOG

AUDIT NO. PROJECT/DEPT/DISCIPLINE AUDIT REPORT AUDIT CLOSE-

AUDITED DATE OUT DATE

Attachment 8