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EXHIBIT XII

QUALITY ASSURANCE PROGRAM REQUIREMENTS

TABLE OF CONTENTS

SECTION TITLE

XII-1.0 INTRODUCTION

XII-2.0 QUALITY ASSURANCE PHILOSOPHY

XII-3.0 OBJECTIVES OF PROJECT QUALITY ASSURANCE PLAN

XII-4.0 PROJECT QUALITY ASSURANCE PLAN REQUIREMENTS

XII-5.0 IMPLEMENTATION OF CONTRACTOR'S PROJECT QUALITY


ASSURANCE PLAN
EXHIBIT XII
QUALITY ASSURANCE PROGRAM REQUIREMENTS

XII-1.0 INTRODUCTION

XII-1.1 CONTRACTOR shall be responsible for the establishment and implementation of


an effective Project Quality Assurance Plan. It shall take due cognizance of all
requirements in the CONTRACT document and International Organization for
Standard, ISO 9001 or equivalent.

XII-1.2 For the purpose of definition, QA Manual is a document setting out the general
quality policies, procedures and practices of an organization. CONTRACTOR shall
implement the QA Manual which comprise of various aspects of quality assurance
pertinent to the WORKS. Project Quality Assurance (PQA) Plan is defined as a
document setting out the specific quality practices, resources and activities relevant
to a particular contract or project.

XII-2.0 QUALITY ASSURANCE PHILOSOPHY

XII-2.1 Quality Assurance is a planned and systematic action by Management that are
necessary for establishing requirements (Quality Definition) and ascertaining
conformance (Quality Control) to ensure that the fabrication and construction
program will perform satisfactorily.

XII-2.2 Quality Assurance shall have a full commitment from CONTRACTOR's


Management in the application of the required program. CONTRACTOR's Project
Management Team shall be delegated with the responsibility to ensure that quality
assurance requirements are met.

XII-2.3 CONTRACTOR shall make every effort to have the PQA Plan, accredited by a
recognized agency to meet ISO 9001. CLIENT will monitor all aspects of quality
assurance to ensure that the PQA Plan is being correctly used and effectively
implemented.

XII-2.4 CONTRACTOR's PQA Plan shall include all phases of a project activity from
establishing functional capabilities to operation of the facility.

XII-2.5 CONTRACTOR shall be responsible for the quality of work of Sub-contractors and
material suppliers in accordance with CONTRACT and statutory requirements.

XII-3.0 OBJECTIVES OF PROJECT QUALITY ASSURANCE PLAN

XII-3.1 Ensure that work performance, capabilities and standards have been appropriately
set by CONTRACTOR's management.

XII-3.1 Provide satisfactory assurance that CLIENT's facilities can be safely operated as per
defined performance standards.

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XII-3.1 Comply with the CONTRACT, Government Rules and Regulations, industry
standards and good engineering practices.

XII-3.1 Minimize delay and downtime during project execution by efficient project
management, good workmanship and minimizing rework by doing the right thing
right the first time.

XII-4.0 PROJECT QUALITY ASSURANCE (PQA) PLAN REQUIREMENTS

XII-4.1 CONTRACTOR shall prepare and submit a PQA Plan which comprises the various
aspects of specific quality assurance practices and fabrication/construction
procedures pertinent to the WORKS for CLIENT's review and approval within
thirty (30) days after the CONTRACT award.

XII-4.2 CONTRACTOR's PQA Plan shall cover as a minimum the following aspects:

A) Management Responsibility

B) Contract Review

C) Design Control

D) Document Control

E) Purchasing

F) Source Inspection

G) Material Identification and Traceability (N/A)

H) Process Control

I) Inspection and Testing

J) Inspection of Measuring and Test Equipment

K) Inspection and Test Status

L) Control of Nonconforming Product

M) Corrective Action

N) Handling Storage, Packing and Delivery

O) Quality Records

P) Internal Quality Audit

Q) Training

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R) Servicing and Warranty

XII-4.3 Management Responsibility

XII-4.3.1 CONTRACTOR's management shall be required to confirm their commitment to


implement the PQA Plan by signing a QA policy statement.

XII-4.3.2 CONTRACTOR shall establish a Project Organization which shall satisfy


CLIENT's requirement. The level of responsibility and assigned authority of these
personnel shall be clearly indicated. In addition, it is the CONTRACTOR's
responsibility to ensure that Sub-contractors also comply with these requirements.

XII-4.3.3 CONTRACTOR shall continuously supply an adequate number of experienced and


qualified personnel as per CLIENT approved project organization. If
CONTRACTOR cannot supply the required personnel, CLIENT may at CLIENT's
option, supply the required personnel and all costs shall be chargeable to
CONTRACTOR's account.

XII-4.4 Contract Review

XII-4.4.1 All CONTRACT requirements are adequately defined and documented.

XII-4.4.2 Any requirements differing from those in the CONTRACT documents are resolved.

XII-4.4.3 CONTRACTOR's assurance to meet all contractual requirements.

XII-4.5 Design Control

XII-4.5.1 Use of the latest revision and issue of all specifications, procedures and drawings.

XII-4.5.2 Documentation.

XII-4.5.3 Interfaces between various disciplines.

XII-4.5.4 Design changes.

XII-4.5.5 "As-Built" drawings and documents as part of the Final Documentation as required
by the CONTRACT.

XII-4.5.6 Vendor data.

XII-4.6 Document Control

XII-4.6.1 CONTRACTOR shall include detail internal generation, distribution and filing of
all documents produced during the execution of WORKS.

XII-4.6.2 The procedure shall be used for identification, collection, indexing, filing, storage,
maintenance and disposition of various records which are documented evidence of
compliance with the CONTRACT documents requirements. The procedure shall
ensure that all documents are reviewed and checked before issue, and that the latest
revisions are used by the relevant personnel and departments at all times.

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XII-4.6.3 All revised documents shall be given the revision numbers by the department
responsible for their preparation. The reasons for the revisions shall be described in
concise manner in the document. Revised parts of documents shall be suitably
indicated for easy identification.

XII-4.6.4 CONTRACTOR shall further be required to compile and submit all documents
produced during the execution of WORKS in accordance with the Final
Documentation Table of Contents. These documents shall form the Final
Documentation which provides a confirmation that the WORKS have been
completed in accordance with the CONTRACT.

XII-4.7 Purchasing

XII-4.7.1 Purchasing organization and relationship with overall project organization.

XII-4.7.2 Duties of key personnel in the purchasing organization.

XII-4.7.3 Approval and issuance of purchase requisitions.

XII-4.7.4 Verification of information contained in purchase orders.

XII-4.7.5 Selection and control of Sub-contractors and materials suppliers.

XII-4.7.6 Co-ordination of inspection and testing.

XII-4.7.7 Control of equipment and materials manufacturing schedules

XII-4.7.8 Expediting.

XII-4.7.9 Control of packing and delivery.

XII-4.7.10 Materials receipt and acceptance, storage and preservation.

XII-4.7.11 Control of documentation.

XII-4.7.12 CONTRACTOR shall ensure that the requisitions cover all information required by
CLIENT and as specified in the CONTRACT Drawings and Specifications.

XII-4.7.13 CONTRACTOR shall make available to CLIENT all information for review and
approval during development of the requisition documents. The procedure shall
assure that all materials comply fully with the requirements in the purchase order.

XII-4.8 Source Inspection

XII-4.8.1 CONTRACTOR should employ source inspection agency and approved by


CLIENT, where WORKS are to be carried out away from CONTRACTOR's
Jobsite. The inspection agency shall be from a recognized organization with the
engineering expertise to check all the relevant design, materials and construction of
the component or structure complies to the requirements of the CONTRACT
documents.

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XII-4.8.2 CONTRACTOR shall provide CLIENT an unpriced copy of the contract of the
appointed source inspection agency with a detailed Scope of Works.

XII-4.8.3 All costs for source inspection shall be borne by CONTRACTOR and shall be
deemed to be included in CONTRACT PRICE. CONTRACTOR shall seek
CLIENT's approval if it intends to utilize its own personnel for source inspection.

XII-4.8.4 Examination, testing or inspection carried out by the inspection agency does not
absolve CONTRACTOR from its responsibility for compliance with the
requirements of CONTRACT documents.

XII-4.8.5 Similarly, involvement by CLIENT in witnessing, testing or inspection, at any stage


of the manufacture or fabrication, does not absolve CONTRACTOR from his
responsibilities to provide an adequate and competent level of inspection and to
ensure these levels are maintained at Sub-contractor and materials supplier's
Jobsites, and that all operations comply with the CONTRACT documents.

XII-4.9 Materials Identification and Traceability (N/A)

XII-4.10 Process Control

CONTRACTOR shall include in the process control of WORKS as a follows:

XII-4.10.1 Documented work instruction defining the manner a process is to be carried out.

XII-4.10.2 Planning the work schedule, monitoring and controlling of each process.

XII-4.10.3 Criteria for acceptance and approval of workmanship.

XII-4.10.4 The responsibilities of the parties involved.

XII-4.11 Inspection and Testing

CONTRACTOR shall describe all required inspections to be performed at all stages


of WORKS which shall also include the following requirements:

XII-4.11.1 Method used to ensure all materials and equipment conform to specified
requirement.

XII-4.11.2 Confirming responsibilities for taking corrective actions in cases of non-


conformance.

XII-4.11.3 Identification of inspection and testing activities required by Inspection and Test
Plan.

XII-4.11.4 Ensuring that all specified inspections and tests have been carried out and the data
meets CONTRACT requirement.

XII-4.12 Inspection of Measuring and Test Equipment

XII-4.12.1 CONTRACTOR shall describe the method used to ensure the measurement
equipment for examination, test and inspection are properly controlled, calibrated

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and maintained. All information about the inspection equipment including the
periodic calibration for accuracy and any adjustment shall be documented.

XII-4.12.2 CONTRACTOR shall ensure that effective monitoring of the quality of inspection
equipment with respect to the specified requirement and standards.

XII-4.13 Inspection and Test Status

CONTRACTOR's PQA Plan shall describe the method used for identification of
inspection and testing status of any process or product at all times during execution
of WORKS. Only those products or materials that have passed the required
inspection and test are used.

XII-4.14 Control of Non-Conforming Product

XII-4.14.1 CONTRACTOR shall describe the effective control of non-conforming items


supplied by CLIENT and CONTRACTOR.

XII-4.14.2 In the event of non-conformance, CONTRACTOR shall issue to CLIENT non-


conformance reports.

XII-4.14.3 CONTRACTOR shall notify CLIENT of the measures proposed for resolving non-
conformances and submit to CLIENT for approval. CONTRACTOR shall
document all non-conformances and their corresponding corrective actions.

XII-4.15 Corrective Action

CONTRACTOR shall describe the methods used to prevent or minimize recurrence


of non-conformity which shall cover as a minimum the following:

XII-4.15.1 Investigating the cause of non-conformity.

XII-4.15.2 Analyzing all processes, work operations, concessions, quality records, service
reports to detect and eliminate potential causes of non-conformity.

XII-4.15.3 Initiating preventive action to eliminate or reduce a problem to a level


corresponding to the risk encountered.

XII-4.15.4 Implementing and recording changes in procedure resulting from corrective actions.

XII-4.16 Handling, Storage, Packing and Delivery

XII-4.16.1 CONTRACTOR shall describe the proper system for the control handling, storage,
packing and delivery, protection and preservation of materials and equipment.

XII-4.16.2 CONTRACTOR shall be able to ensure the quality of items, materials, equipment
or product are controlled, protected and preserved during handling, storage and
deliveries.
XII-4.16.3 CONTRACTOR shall implement an appropriate method for authorisation receipts
and dispatch of materials or equipment from storage.

XII-4.17 Quality Records

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XII-4.17.1 CONTRACTOR shall describe the systematic identification, collection, indexing,
filing, storage, maintenance, and disposition of various records which documented
evidence of compliance with the CONTRACT document requirements.

XII-4.17.2 The system shall be able to ensure all quality records specified by each
CONTRACT are legible, identifiable, stored, maintained and retrievable.

XII-4.18 Internal Quality Audit

XII-4.18.1 CONTRACTOR shall carry out planned audits to ensure the adequacy of the
quality assurance, quality control, inspection and testing activities in order to ensure
complete traceability and documentation of the activities.

XII-4.18.2 The audit results shall be documented and CLIENT reserves the right to be
represented during these audits and have access to all pertinent documents.

XII-4.18.3 CLIENT shall have the right to conduct periodic audits on CONTRACTOR
pertaining to the QA/QC, safety, inspection activities and others activities related to
the WORKS during the project phase. CLIENT shall notify CONTRACTOR two
weeks in advance prior to the audits.

XII-4.18.4 All irregularities or non-conformances revealed by the audits and during continuous
review shall be corrected. Continuous review may be defined as a documented
activity to verify fabrication, documentation, QA and QC procedures and vendor
documentation for comment and/or approval.

XII-4.19 Training

XII-4.19.1 CONTRACTOR shall describe the system for identifying the training needs and
provision of training to all personnel involved in CLIENT project.

XII-4.19.2 The system shall be able to provide guidelines to all personnel to perform specific
assignments and conform to CONTRACT requirements.

XII-4.20 Servicing/Warranty

CONTRACTOR shall include in the PQA Plan, the services provided after the
work completion i.e. the warranty and maintenance activities.

XII-5.0 IMPLEMENTATION OF CONTRACTOR'S PQA PLAN

XII-5.1 CONTRACTOR shall be responsible for ensuring that works are carried out in
accordance with the project and statutory requirement.

XII-5.2 CONTRACTOR shall carry out periodic independent audits, reviews and
evaluations as per management's approved program to ensure that all the
requirements identified in CONTRACT documents and PQA Plan are implemented.

XII-5.3 CLIENT or its Authorized Representative shall monitor and verify the
CONTRACTOR's PQA Plan is implemented up to CLIENT's satisfaction.

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XII-5.4 CLIENT's auditors may be utilized to verify the overall CONTRACTOR's PQA
Plan is adequate and functional.

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