Document Title

CONTROL OF NONCONFORMING OUTPUTS

PROCESS

Document Number

01 0 1 of 37

Edition Revision No. Effectivity date Page

Document Title:

CONTROL OF NONCONFORMING
OUTPUTS PROCESS

Approval of
Department / ISO JOWELL P. MAX
Section / Process DEPARTMENT CABRERA FANKHANEL MILA D. PEREZ
Owner
Department Originator Reviewed Approved

IMPORTANT:
This cover sheet is part of the procedure and is not to be discarded unless superseded by a revised issue.
Unauthorized reproduction is strictly prohibited.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS

Document Number DMCI-IM-TQM-004

01 0 2 of 37

Edition Revision No. Effectivity date Page

REVISION HISTORY
Execution Revision Revision Description of Changes Page Originator Reviewed
Date Number Type Affected Date

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS

Document Number DMCI-IM-TQM-004

01 0 3 of 37

Edition Revision No. Effectivity date Page

CONTENTS

1. OBJECTIVE ……………………………………………………………………………………… 4

2. SCOPE ……………………………………………………………………………………………. 4

3. DEFINITION OF TERMS ……………………………………………………………….…….. 4

4. REFERENCE DOCUMENTS …………………………………………………………………… 5

5. RESPONSIBILITY AND AUTHORITY ……………………………………………………… 5

6. PROCEDURE ……………………………………………………………………………………. 6

6.1. CONTROL OF NONCONFORMING INCOMING MATERIALS AND/OR EQUIPMENT

6.2. CONTROL OF NONCONFORMING STRUCTURES (IN-PROCESS AND FINAL PRODUCT)
6.3. CONTROL OF NON-CONFORMING PROCESS OUTPUTS (GENERAL)
6.4. EMERGENCY AND SPECIAL CASES
6.5. DISPUTES AND RESOLUTION
6.6. RECORDING AND STORAGE

7. RISK MANAGEMENT ………………………………………………………………………….. 14

8. FORMS ……………………………………………………………………………………………. 15

9. APPENDICES ……………………………………………………………………………………. 16

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 4 of 37

Edition Revision No. Effectivity date Page

1.0 OBJECTIVE

The objective of this process is to establish and maintain a uniform and consistent
procedure of taking action for the prevention of unintended delivery and use of outputs
such as materials, equipment, products, structure and services that do not conform to
their specified requirements.

It includes controls that provides correction, segregation, containment, return or

suspension of provision of products and services, informing the customer and/or
obtaining authorization for acceptance under concession.

2.0 SCOPE

This procedure is applicable at any stage/s of implementation of the Integrated

Management Systems ISO 9001:2015 requiring action to control nonconforming
outputs and its cause/s identified before, during and after delivery of products and
services.

3.0 DEFINITION OF TERMS

Nonconformity (NC) Any instance where practice or evidence does not fulfill the
requirements. This may be also a condition of “work in place" or
"work in progress" that lacks agreement or conformity, and which
cannot be corrected in the normal course of action.
Punchlists / Snags Workmanship deficiency that can be repaired in a manner that will
not require large amount of resources and time. Can be corrected
by “Making Good” repairs.
Corrective Action A report detailing the nonconformity identified to make an
Report (CAR) unambiguous, defensible, clear and concise definition of the
problem so that corrective action can and will be initiated. This
report also includes an analysis of the root cause of the
nonconformity, request for approval and execution of corrective
action/s, verification and review of the effectiveness of the
corrective action/s.
Issuing Entity (IE) Any Personnel, Department or Company who has the first-hand
knowledge of the nonconformity identified. The Personnel,
Department or Company who raise and issue the Corrective Action
Report (CAR).

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 5 of 37

Edition Revision No. Effectivity date Page

Head of Issuing The Head of the QA/QC, OH&S, EMS, ISO or TQM who have
Entity (HIE) jurisdiction over level wherein the nonconformity was identified.
Responsible Entity Personnel, Department or Company who committed and
(RE) responsible for the nonconformity.
Head of Responsible The Project Manager, Department Head, SBU Head, Support BU
Entity (HRE) Head or General Manager of the Responsible Entity (RE) who
committed the nonconformity.
Correction/Immediate Short term actions that can be implemented to quickly address part
Action or full cause of the nonconformity.
Corrective Action Long term actions taken to eliminate the cause/s of an existing non-
conformity in order to prevent recurrence.
Concession Permission to use or release a product or service that does not
conform to specified requirements.
Correction Action to eliminate a detected nonconformity through repair or
replacement of defective part/s.
Segregation Process of setting apart the nonconforming materials or equipment
from the conforming ones to prevent unintended use.
Removal and The process of removing the identified nonconforming products
Replacement and services and changing to conforming ones.
Repair To make amends for bringing about the quality level for use of a
product, but not to the extent of altering its original intent.
Preventive Action Action to eliminate the cause of a potential nonconformity or other
potential undesirable situation
Standard Materials Commons materials or equipment not specified in the Inspection
and Test Plan to be check by Stock Clerk using the normal
Warehousing Process.

4.0 REFERENCE DOCUMENTS

5.1 ISO 9001:2015 Standard, Clause No. 8.7

5.2 Internal Audit Procedure
5.3 Control of Records Procedure
5.4 Corrective Action Procedure
5.5 Customer Focus Procedure
5.6 Quality Assurance / Quality Control Process
5.7 Project Turn-Over Process
5.8 Warehousing Control Process

5.0 RESPONSIBILITY AND AUTHORITY

5.1 Head of Issuing Entity (HIE) shall be the following:

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 6 of 37

Edition Revision No. Effectivity date Page

Level Head of Issuing Entity

Project Level Project QA/QC Head

Support BU Support QA/QC Head

SBU Level SBU QA/QC Manager
Corporate Level Corporate QA/QC Head
Executive Level TQM Manager
Integrated Management System DMR - Quality

Head of Issuing Entity (HIE) shall be responsible for:

5.1.1 Identifying nonconforming materials, equipment, structures, product

and/or services and issuance of Corrective Action Report (CAR) to the
Responsible Entity (RE) in accordance with the Corrective Action
Process.

5.1.2 Evaluating the validity and investigating the cause of nonconformity

identified.

5.1.3 Requesting corrective to the Responsible Entity (RE) to prevent the

unintended delivery and use of outputs such as materials, equipment,
structures, products and/or services that do not conform to their
specified requirements.

5.1.4 Decision on disposition of nonconforming materials, equipment,

structures and services.

5.1.5 Reviewing the effectiveness of the corrective action/s taken to correct

the nonconformity to prevent recurrence and the unintended delivery
and use of nonconforming outputs.

The Head of Issuing Entity shall have the authority to:

5.1.6 Suspend the work implementation or provision of products and services.

5.2 Head of Responsible Entity (HRE)

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 7 of 37

Edition Revision No. Effectivity date Page

The Head of Responsible Entity shall be the following:

Level Head of Responsible Entity

Project Project Manager
Support BU General Manager / Support BU Head
Department Department Head
SBU Level SBU Head
Corporate Level Corporate Head
Executive Level General Manager

The Head of Responsible Entity (HRE) shall be responsible for:

5.2.1 Undertaking corrective to prevent the unintended delivery and use of

nonconforming outputs.

5.3 Project QA/QC Head

The Project QA/QC Head shall be responsible for:

5.3.1 Identification and reporting of nonconformity observed to the

Procurement Department during the Inspection of Incoming Materials
and Equipment in accordance with Quality Assurance / Quality Control
Process.

5.3.2 Identifying nonconformities and issuing nonconformity reports or

punchlist as necessary during Inspection of Final Products and Services
to Operations Section in accordance with the Quality Assurance and
Quality Control Process and Turn Over Process.

5.3.3 Ensuring that nonconforming outputs are not delivered to or utilized by

the end/user or Customer.

The project QA/QC Head shall have the authority to:

5.3.4 Recommend rejection of nonconforming materials and equipment to

the Procurement Department.

5.4 Procurement Department is responsible for:

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 8 of 37

Edition Revision No. Effectivity date Page

5.4.1 Informing and requesting action/s from Subcontractors/Suppliers over

identified nonconforming materials, equipment and/or services.

5.4.2 Coordinating with Subcontractors/Suppliers to facilitate the

replacement/ return of delivered nonconforming products and services.

5.5 The Project Warehouse Stock Clerk shall be responsible for:

5.5.1 Containment, segregation and/or disposal of delivered nonconforming

materials and equipment.

5.5.2 Facilitating the removal and replacement of delivered nonconforming

materials and equipment in coordination with the Procurement
Department.

6.0 PROCEDURE

6.1 Control of Nonconforming Incoming Materials and/or Equipment

6.1.1 The Project QA/QC Staff with the supervision of the Project QA/QC Head
shall inspect incoming materials and equipment based on the approved
Inspection & Test Plan (ITP) and in accordance with the Quality
Assurance / Quality Control Process.

6.1.2 The Project Warehouse Stock Clerk shall inspect common “standard
materials” not covered by the approved Inspection and Test Plan in
accordance with Warehousing Process.

6.1.3 The Project QA/QC Staff shall accomplish the Delivery Inspection Report
after the inspection. The Project QA/QC Staff shall note the
observations prior to unloading. The Project QA/QC Staff shall
recommend actions to the Project QA/QC Head if the material or
equipment is to be:

1. Recommended for Acceptance

2. Subject for Resampling and Retesting
3. Rejected
Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 9 of 37

Edition Revision No. Effectivity date Page

6.1.4 The Project QA/QC Head shall review and approve the recommended
action of the Project QA/QC Staff if found to be valid. Likewise, the
Supplier shall concur with the findings/observations of the Project
QA/QC Staff if found to be valid.

6.1.5 The Project QA/QC Head together with Project Warehouse Stock Clerk
shall tag nonconforming materials and equipment using the Disposition
Tag to prevent the unintended use of materials/equipment. The Project
QA/QC Head shall determine the final disposition of nonconforming
materials and equipment.

6.1.6 The Project QA/QC Head and Project Warehouse Stock Clerk shall
inform the Procurement Department and provide a copy of the Delivery
Inspection Report.

6.1.7 The Procurement Department shall request action/s from the Supplier
to address the nonconformity identified. The Procurement Department
shall request the Supplier/Subcontractor to perform the necessary
action/s based on the final disposition agreed to bring the product to
level of conformance not limited to the following:

a) Replacement
b) Repair
c) Substitution
d) Concession

6.1.8 Concession Agreement shall be any written document confirming the

permission to use, release or accept a product or service that does not
conform to specified requirements with or without meeting special
conditions agreed by both parties.

6.1.9 The Project Stock Clerk in coordination with the Supplier/Subcontractor

and Procurement Department shall contain, segregate, return and/or
dispose the delivered nonconforming materials and equipment as
applicable in accordance with the agreed final disposition.

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 10 of 37

Edition Revision No. Effectivity date Page

6.1.10 The Supplier/Subcontractor shall take the necessary action/s to correct

the nonconforming materials and equipment. Replacement delivery
shall be inspected utilizing the same process described herewith.

6.1.11 The Project QA/QC Head shall ensure that all nonconforming materials
and/or equipment shall not be incorporated in the work.

6.2 Control of Nonconforming Structures (In-Process and Final Product)

6.2.1 The Project QA/QC Head shall inspect the Final Structure or portion
thereof based on the approved Inspection & Test Plan (ITP) in
accordance with the Quality Assurance / Quality Control Process.

6.2.2 When nonconformity in the inspected structure is identified, the Project

QA/QC Head shall issue a Corrective Action Report (CAR) to the
Operations in accordance with the Corrective Action Process. The
Project QA/QC Head shall request correction/s and corrective action/s
from the Operations to address the nonconformity in accordance with
the Corrective Action Process.

6.2.3 Punchlist or snags shall be closed and addressed in accordance with the
Turn Over Procedure and Quality Assurance and Quality Control
Process.

6.2.4 The Project QA/QC Head shall tag nonconforming structure/s using the
Disposition Tag to prevent its unintended use or the commencement of
succeeding work as necessary. Hold points described in the approved
Inspection and Test Plan (ITP) shall apply.

6.2.5 The Project-in-Charge under the supervision of the Project Manager

shall contain, isolate or segregate the nonconforming structure as
necessary to prevent its unintended use or unsafe condition.

6.2.6 The Project-in-Charge under the supervision of the Project Manager

shall take the necessary action/s to correct the nonconforming materials
and equipment in accordance with the Corrective Action Process but
not limited to the following:
Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 11 of 37

Edition Revision No. Effectivity date Page

1) Rework / Correction / Repair

2) Rejected (for Removal and Replacement)
3) Authority to use/proceed through Concession Agreement with the
Customer
4) Scrap / Disposal

6.2.7 Concession Agreement shall be any written document confirming the

permission to use, release or accept a product or service that does not
conform to specified requirements with or without meeting special
conditions agreed by both parties.

6.2.8 The Project QA/QC Head shall verify the effectiveness of the corrective
actions taken in accordance with the Corrective Action Process.

6.2.9 All nonconformity identified in the structure or portion thereof shall be

addressed and corrected by the Project-in-Charge prior to turn-over to
the Customer/Client. The Project-in-Charge shall turn-over the
structure or portion thereof to the Customer/Client in accordance with
the Turn-over Procedure.

6.3 Control of Non-Conforming Process Outputs (General)

6.3.1 All nonconforming outputs of processes shall be identified and corrected

in accordance with the Corrective Action Process. All Process Owners
shall be responsible for identifying and issuing Corrective Action Report
(CAR) to the Responsible Entity.

6.3.2 Nonconforming outputs identified during and after delivery of products

and services shall be controlled not limited through the following control
actions:

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 12 of 37

Edition Revision No. Effectivity date Page

No. Type of Possible Control Responsible Entity

Nonconformity
1 Nonconforming  Suspension of Service or Technical
Design provision/s thereof Services Head
 Suspension of Design
Output
 Meeting with Customer
3 Nonconforming Bid  Suspension of Head of
Submission or provision Engineering
thereof
4 Nonconforming  Suspension of Process Project Manager
Discharge (Waste)  Treatment
 Containment
5 Nonconformity to  Suspension of Work / Project Manager /
Administrative, Process Department Heads
Regulatory,  Informing the customer /Compliance
Statutory and Legal  Correction, repair, Officer
Requirements removal and
replacement
6 Training Services  Suspension of Training Training Director

6.3.3 The Responsible Entity (RE) shall determine and propose the necessary
control to prevent nonconforming outputs to be incorporated in the
work or delivered to and used by the Customer.

6.3.4 The Head of Issuing Entity (HIE) shall ensure that the Corrective Action
Process is effectively implemented at any stage of the work.

6.3.5 Control of Nonconforming Concrete and Concrete Outputs (RMC) shall

be in accordance with Control of RMC Nonconforming Outputs
Procedure.

6.3.6 Control of Nonconforming Service of Equipment Management Division

(EMD) shall be in accordance with EMD Control of Nonconforming
Services Procedure.

6.4 Emergency and Special Cases

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 13 of 37

Edition Revision No. Effectivity date Page

6.4.1 In special cases wherein the application of control for nonconforming

outputs is critical, the Department Head or Senior Staff may execute
immediately based on his/her capacity and knowledge the necessary
control/s and disposition to prevent the unintended use of the product
and services which may result not limited to the following:

1. Accident or unsafe condition

2. Property loss/damage
3. Environmental catastrophe
4. Major Financial loss
5. Loss of opportunity

6.4.2 After execution of the immediate control/s, and when imminent danger
or potential loss above stated is/are fundamentally controlled, the
responsible Department Head shall re-analyze the suitability of
immediate controls applied and shall make adjustments as necessary.
The normal procedure described in this process shall apply
subsequently.

6.5 Disputes and Resolution

6.5.1 In case of dispute, resolution shall be decided by the next/higher level

of authority who have jurisdiction and governance over both the Issuing
Entity (IE) and Responsible Entity (RE). The matrix of
jurisdiction/authority over disputes is described in the Jurisdiction Guide
in Appendix 3.

6.5.2 In case of material and equipment supply, disputes shall be resolve and
decided by the Procurement Department.

6.6 Recording and Storage

6.6.1 The Project QA/QC Head/DMR shall update the Corrective Action Report
(CAR) control register to reflect the status of the corrections and
corrective actions taken.

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 14 of 37

Edition Revision No. Effectivity date Page

7.0 RISK MANAGEMENT

Control / Solution Responsible

Risk Consequence/s
/ Mitigation
1. Procedure is not Unintended delivery and Annual conduct of SBU QA/QC
carried out use nonconforming Internal Audit Head /
products and services Integrated
Management
Representative
2. Personnel Unintended delivery and Annual ISO Integrated
implementing the use nonconforming Awareness Training Management
procedure is not products and services Representative
competent leading to
ineffective
implementation of
procedure
3. Inadequate Non-performance of Annual review of SBU QA/QC
resources to conduct procedure resources and proper Head /
the process and allocation Integrated
internal audit leading Management
to ineffective Representative
implementation of
procedure
4. Procedure is not Unintended delivery and Annual review of Corporate
effective or flawed use nonconforming procedure and QA/QC Head
products and services amendment as
necessary

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 15 of 37

Edition Revision No. Effectivity date Page

8.0 FORMS

Form Title Document Storage Responsibility

Number Retention Location
Time
Delivery Inspection 2 years Projects / DC
Report (DIR) Departments
Disposition Tag 2 years Projects / DC
Departments
DIR Registry 2 years Projects / DC
Departments
Corrective Action Report 2 years Projects / DC
Departments

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 16 of 37

Edition Revision No. Effectivity date Page

9.0 APPENDICES

APPENDIX 1: PROCESS FLOW CHART

INPUT PROCESS OUTPUT

Issuing Entity issue 1. Project QA/QC Head and Stock Clerk to Conforming Materials,
Corrective Action Report coordinate with Procurement Equipment, Structures and
(CAR) or Delivery Inspection Department. Services
Report 2. Project QA/QC Head and Stock Clerk tag
nonconforming materials and
equipment.
3. Project QA/QC Head to tag
nonconforming structures.

Responsible entity to propose corrective

actions in accordance with Corrective Action
Process

Head of Issuing Entity to review proposed

corrective action and decide on final disposition
of nonconforming materials, equipment,
structure and/or services.

Responsible Entity to execute correction, Checkpoint:

approved corrective action/s and disposition of Head of Issuing Entity to
nonconforming materials, equipment, structure inspect after correction and
and services verify the proper conduct of
correction action/s using
CAR.

Head of Issuing Entity to verify the effectiveness

of corrective action taken.

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 17 of 37

Edition Revision No. Effectivity date Page

APPENDIX 2: FORMS

1. Corrective Action Report (CAR)

2. CAR Control Register
3. Disposition Tag

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.
 Document Title
CONTROL OF NONCONFORMING OUTPUTS
PROCESS
Document Number
01 0 18 of 37

Edition Revision No. Effectivity date Page

APPENDIX 3: JURISDICTION GUIDE MATRIX

Level Issuing Entity Responsible Entity Arbiter / Mediator

Project Level Project QA/QC Head Project Department SBU QA/QC
Head or Staff Manager
Project EHS Officer Project Department SBU EHS Manager
Head or Staff
SBU Level SBU QA/QC Manager SBU Department Corporate QA/QC
Head Head
SBU EHS Officer SBU Department Corporate OH&S
Head Head or Corporate
EMS Head
Corporate Level Corporate QA/QC Head, Corporate TQM Manager
Corporate OH&S Head or Department Head
Corporate EMS Head
Executive Level Integrated Management General Manager President
Representative / TQM
Manager

Printed versions are UNCONTROLLED except when stamped “CONTROLLED COPY” in red.