CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

1 Mar 03

2 of 14

REVISION CONTROL SHEET

LATEST REV

DATE ISSUED

PREPARED

REVIEWED

APPROVED

COMMENTS

1 October 2002

B. Burn

R.Ford

A.McIntosh

Issued For Use

1 March 2003

B. Burn

C.Binks

A.McIntosh

Department Name
Change

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

1 Mar 03

3 of 14

TABLE OF CONTENTS

1.

INTRODUCTION.....................................................................................................4

2.

SCOPE ...................................................................................................................4

3.

RESPONSIBILITIES...............................................................................................5

4.

DEFINITIONS AND ABBREVIATIONS ..................................................................6

5.

RELATED AND REFERENCE DOCUMENTS .......................................................7

6.

PROCEDURE .........................................................................................................7

7.

REVISIONS .......................................................................................................... 10

8.

APPENDICES..................................................................................................10-14

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

1.

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

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INTRODUCTION
The purpose of this DOCUMENT is to ensure the control of Non-Conformance of
material and manufacturing processes.
Quality Assurance / Quality Control on the Project is the contractual responsibility
of the EPCI Contractor who must put into place a quality system that complies
with the requirements of ISO 9000 standard and identifies, marks and segregates
(whenever applicable) items that do not conform to specified requirements and
prevents their inadvertent use on the Project.
These non-conforming items are recorded, reviewed, dispositions decided and
approved by designated Company personnel.
Remedial actions are taken and recurrence prevented.
The Company QC Department and Project Team must ensure that these steps
are carried out and that all necessary actions required to ensure the control of
non-conforming products, i.e. materials, processes, procedures and actions, are
utilized.
In addition, this procedure will define the methodology in issuing, handling and
filing of non-conformance reports within the Specific project
An integrated team approach with EPCI Contractor will be taken to avoid
duplication of effort and eliminate inefficiencies.

2.

SCOPE
The scope of this procedure is to describe the systems for identification,
reporting, evaluation and disposition of non-conformance in relation to materials,
procedures, actions, processes and products that will be actioned during the
fabrication, construction and installation of the Specific project
The procedure identifies in detail the necessary actions to be followed and the
associated responsibilities for taking remedial action and maintaining records of
all non-conformances and documentation.
Design changes arising from non conformance activities are not covered under
this scope and are subject to a site query system or a design change control
system.

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

3.

DOCUMENT NUMBER

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DATE

PAGE

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RESPONSIBILITIES
The application of this procedure shall be the responsibility of the Company
Project QC department within the Company Project Team.
This procedure is relevant to material, process, fabrication, installation, precommissioning and commissioning of all works executed on the Specific project
Non-conformance can be identified during receipt of material, process,
construction, installation, pre-commissioning and commissioning of work. The
Company QC Department will interface with the EPCI QA/QC Department to
identify and control non-conformances.
It is the responsibility of all Project personnel in the above areas to assist in the
identification of possible non-conformances and to promptly notify their
departmental head/section lead and to the EPCI QA/QC personnel in charge of
the inspection of a particular activity.
The EPCI QA/QC personnel in charge of the area or activity where the nonconformance is discovered will be responsible for the preparation of a NonConformance Report (NCR) or a Material Non-Conformance Report (MNCR). If
necessary, the Company QC Department personnel may assist in preparing the
report and the development of proposals for remedial action and ways to stop
recurrence of the problem.
Company QC Personnel Responsibilities
During fabrication and construction activities regular inspections will take place
and it will be the responsibility of the Company QC department inspectors to
ensure that the contractor highlights, informs, records and documents any non
conformances against an applicable material, process, procedure or activity.
This does not free the Contractor of any of his contractual responsibilities.
A copy of all MNCR/NCRs will be maintained at site and copies will be sent to
Company Project QC Manager. The original is to be held by EPCI Contractors
QA/QC Manager.
Contractors approved documentation, such as MNCR and NCR forms, will be
utilized to avoid duplication of paperwork.
The Project and/or EPCI QC inspector responsible for the activity will be
responsible for performing the re-inspection of the non-conformity and reporting
of such re-inspection activities.
It is the responsibility of the designated Company QC department to ensure that
a record of all inspection related non-conformance reports are held and

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

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subsequent actions are recorded, distributed and retained within the Company
QC Department.
Project Engineering Section
It is the responsibility of the appropriate discipline engineers in the Project to
oversee the EPCI Engineering department and ensure that the construction
drawings, specifications, procedures and data sheets conform to contract
requirements.
Project QC Manager
It is the responsibility of the Companys Project QC Manager to liaise with the
Contractor to report the applicable MNCRs or NCRs and their dispositions
It is the responsibility of the Companys Project QC Chief Inspector to ensure that
a record of all MNCRs & NCRs and their dispositions are retained within the
project filing system.
4.

DEFINITIONS AND ABBREVIATIONS

Except where explicitly stated otherwise, items in this reporting procedure shall
have the following meaning:
Action Party shall mean a person or a group of people instructed to carry out
remedial actions to ensure a product can, by the use of additional approved
repair procedures, achieve a condition which fulfils the specification.
CA shall mean a Certifying Authority i.e., MIGAS.
EPCI Engineering Department shall mean the Contractors EPCI Engineering
Department.
EPCI QA/QC Department shall mean the EPCI Contractors Department based
at EPCI contractors main office.
Material Non Conformance Report or MNCR shall mean a report that
identifies, reports on, evaluates and decides on a disposition on a material that
will be actioned in the fabrication, construction or installation of the Specific
project
Non Conformance Report or NCR shall mean a report that identifies,
reports on, evaluates and decides on a disposition on a process, procedure,
action or product that will be actioned in the fabrication, construction or
installation of the Specific project

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

1 Mar 03

7 of 14

Non-Conforming Material shall mean any material in which one or more of

the specified characteristics does not conform to the specified requirements.
Non-Conforming Process shall mean a construction or fabrication process
that does not conform to specified process criteria which is used to bring an item
into conformance.
Non-Conforming Product shall mean a departure from the quality
characteristics that result in a product, assembly or sub-assembly not meeting
specified requirements.
Overage, Shortage and Damage (OS&D) Report shall mean a report that
identifies any discrepancy from the purchase order requirements carried out on
receipt of goods at Contractors/Sub-Contractors facility by Contractors/SubContractors material handling personnel.
Remedial Action shall mean the agreed action or actions that take place by a
person or organization responsible for the work or activity in which a nonconformance has been identified and described within a MNCR or a NCR form.
Repair shall mean work that is performed on a non-conforming material or
product by a process that is different from one that is normally used to initially
fabricate the material or product which brings it back to a state of conformance.
TPA shall mean a Third Party Agency.
SPECIFIC PROJECT e.g.WHP-P Project shall mean any activities carried out
on the Wellheads, Pipelines and Oil Offloading Buoy, during Engineering,
Procurement, Construction, Installation, Pre-Commissioning, Commissioning and
Hand-Over.
Company QC Department shall mean the Project Quality Control Department
based at EPCI Contractors main office in Jakarta.
5.

RELATED AND REFERENCE DOCUMENTS

ISO 9001 1994 Model for Quality Assurance in Design/development,
Production, Installation and Servicing.

6.

PROCEDURE

6.1

Non-Conformance Reporting General

6.2.1 Contractor is contractually responsible to implement a documented nonconformance reporting and corrective action system.

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

1 Mar 03

8 of 14

6.2.2 Within the Project, material, documentation, and/or manufacturing processes,

which do not conform to specified and /or agreed requirements shall be detected,
identified as such and reported as quickly as possible on an NCR or MNCR. This
non-conformance report will contain a clear description of the non-conformance
against material, process or documentation. If additional pages/documentation is
required to support or describe the non-conformance such documents shall be
listed in the reports as enclosures.
6.2.3 Each non-conformance report shall be forwarded to Company Project QC
Department for evaluation, registration and further processing. Each report will be
given a unique number, location of origin of report and party responsible for the
non-conformance.
6.2.4 Materials used in any process within the Project shall be inspected by the
Contractor and where possible, by the Companys Project QC Inspectors. Any
defective materials, or materials which do not conform to specified and /or agreed
requirements, shall be reported and recorded through the MNCR system. All
defective material will be reported on a MNCR form.
6.2.5 Materials identified through a MNCR shall be subject to close control such that:

Their unauthorized or inadvertent use or mixing with conforming materials

is prevented. Materials identified as such will be immediately quarantined,
clearly marked as such, and moved to a designated quarantine area until a
disposition has been agreed on.

Non-conforming items/material are identified in a unambiguous manner by

Contractors material handling personnel and any materials that are
pending evaluation and approval of disposition by authorized personnel
shall be physically segregated from items which conform to specifications.
At this point, an OS&D Report shall be prepared where necessary to
identify any discrepancies with the Purchase Order (PO).

Where non-conforming items cannot be physically segregated from

conforming items then controls shall be implemented such that
identification is unambiguous.

Authorized personnel implement approved disposition and the reinspection shall be carried out to original requirements.

Records are to be maintained which readily and positively identify the nonconforming item or material and specify the nature and extent of the nonconformance. Records shall also contain evidence that the repaired or
rectified item / material have been re-inspected in accordance with the
approved methods.

When an agreed and approved disposition is that an item or material be

accepted in its non-conforming condition (i.e. Accept as is) a full
description of the change waiver, concession or deviation that has been
accepted shall be documented and approved by authorized parties. Note

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

1 Mar 03

9 of 14

that this would be a one off waiver and not a general relaxation of the
specification.
6.2

Non-Conformity during Work

6.2.1 When initiating a non-conformance report the originator shall ensure that the
following information is included in the report.

Contractor/ subcontractor location.

Party responsible for the non-conformance.

Location and activity where the non-conformance occurred.

Brief and concise statement of the non-conformance with reference to

controlling documents i.e. specifications, procedures and QA/QC plans or
inspection and test plans.

Remedial action to prevent recurrence of non-conformity.

Recommended disposition proposal.

Identification of action party.

6.3

The application of a NCR or MNCR shall be restricted to individual items or

process of major activity or repetitive defects on a large number of items or
processes. It shall not be used to document individual defects, where remedial
procedures are already established.

6.4

Disposition of Non-Conformity
Each MNCR or NCR shall receive one of the following dispositions:

6.4.1 Accept As Is This disposition shall be considered when the non-conformance

is deemed not to have a detrimental effect on design, use, safety or any adverse
conditions to the function/operation of the product or when rework is considered
impractical or it will not improve the condition.
This type of disposition requires approval from Companys QC Manager and
TPA/CA, where applicable.
6.4.2 Repair This disposition shall be considered when the non-conforming item
material or process, by the use of additional approved repair procedures, can
achieve a condition which fulfils the specifications.
6.4.3 Reject This disposition shall be considered when material, equipment or an
item is unfit for its intended use and/or cannot be repaired to an acceptable level.
All items deemed Reject shall be removed from the construction site.

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CONOCO INDONESIA INC. LTD.

PROJECTS DEPARTMENT
SPECIFICATION
TITLE
NON CONFORMANCE
REPORTING PROCEDURE

6.5

DOCUMENT NUMBER

REV

DATE

PAGE

84501-9200-9P-009

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Final Documentation

6.5.1 All original process- or production-related NCRs and the NCR status log shall be
retained in the Contractors QA/QC Department. Copies of all documentation
related to the issue and resolution of NCRs shall be placed in the project asbuilt
dossier or data book.
6.5.2 On a monthly basis, the Company Project QC Manager will review the nonconformance report status and its dispositions in order to identify any significant
trends. Corrective actions taken shall be assessed in order to prevent the
recurrence of non-conformities. QA/QC reports from Contractors production and
fabrication/construction facilities shall include a summary of NCRs raised or in
process.
The Project QC Manager shall appraise all data on non-conforming material or
process and the results will be presented at management review meetings.
6.6

The clearance of any disposition by the Company does not relieve the Contractor
of any of his obligations and responsibilities under the contract.

7.

REVISIONS
This Procedure may not be revised unless approved by the Company Project
Manager.

8.

APPENDICES
The following Appendix is an integral part of this procedure
Sample MNCR Report
Sample NCR Report
Sample NCR Log
Sample NCR Flow Sheet

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84501-9200-9P-009

PROJECT MATERIAL NON

CONFORMANCE REPORT
Reference Number

Revision

Date:

MNCR Serial number

Page

Contractor
PO No

MATERIAL
DESCRIPTION
PO Item No

Units

PROPOSAL

A = Accept As Is
B = Repair
C = Rejected

No further Action
Subject to corrective action
New Material to be procured

REMARKS

PROPOSED BY

APPROVED BY

Original
Copy

TPA

Name:
Signature
Date
Copy

Stores
Project

Copy

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TPA

Quantity

84501-9200-9P-009

PROJECT NON CONFORMANCE

REPORT
Reference Number

Revision

Date:

MNCR Serial number

Page

Contractor
PO No

DESCRIPTION
PO Item No

Units

PROPOSAL

A = Accept As Is
B = Repair
C = Rejected

No further Action
Subject to corrective action
New Material to be procured

REMARKS

PROPOSED BY

APPROVED BY

Original
Copy

TPA

Name:
Signature
Date
Copy

Stores
Project

Copy

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TPA

Quantity

84501-9200-9P-009

PROJECT NONCONFORMANCE
REPORT LOG
NON CONFORMANCE
REPORT (NCR) LOG
NCR ORIGINATOR
NO.

AUDIT
REF.

NCR
ISSUE
DATE

NCR
ISSUED TO

DEFICIENCY

AGREED
COMPLETION
DATE

ACTUAL
CORRECTIVE
ACTION
COMPLETION

DATE

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NCR
CLOSED
DATE

Contractor QA/QC

CII QA/QC

CII DISCIPLINE ENGINEER

CII PROJECT
ENGINEER

A NCR or MNCR is identified by either Client or

Contractor QA/QC Department
Inform Client and
prepare NCR/
MNCR with
assistance from
client when
needed. Transmit
to CII QC

Give instruction to QC
Department

On receipt
refer to
engineering if
applicable.
Act on
received
advice from
engineering

YES

Discipline
Eng

Give advice on Query

and report back to PE

Project
Eng

Prepare answer to
NCR/MNCR c/w
Action Plan

Record NCR/
MNCR and
their
disposition.
Transmit to
Contractor

Contractor carries
out remedial work

Gain
approval
for
action or
"Accept
as is"

Clear NCR/
MNCR

Instruct QC to reinspect to original

specification if OK
sign off if not
return to start of
process

If the result of the NCR//MNCR is

"REJECT" remove from site where
possible

84501-9200-9P-009