Engineering Procedure

SAEP-380 10 December 2015

Equipment Deficiency Report
Document Responsibility: Project Quality Standards Committee

Saudi Aramco DeskTop Standards

Table of Contents

1 Scope………………………………………….... 2
2 Objective…………………………………….…. 2
3 Applicable Documents………………………... 2
4 Definitions and Abbreviations………………… 3
5 Deficiency Classification………....…………… 5
6 Instructions…………………………………..…. 5
7 Responsibilities………………………………… 6

Appendix A - EDR Process Flow Chart…….…... 12

Appendix B - EDR Deficiency List………………. 13
Appendix C - EDR Closing Form 8.3-F-02-VID.. 14

Previous Issue: 6 January 2013 Next Planned Update: 10 December 2018

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Primary contact: Al-Ghamdi, Khalid Salem (ghamks0k) on +966-13-8801775

Copyright©Saudi Aramco 2015. All rights reserved.

Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

1 Scope

1.1 The Equipment Deficiency Report (EDR) process applies to defective

inspectable material procured through direct or indirect purchase orders.
Commentary Notes:

EDR can be issued for non-inspectable material, Non-RVL material (project

approval), and defects resulted from transportation; however, the EDR will be
archived for future analysis.

For Non-RVL material (project approval) where RIO was involved to perform
inspection/vendor qualification, an EDR can be issued and RIO investigation shall
focus only on the inspection agency/inspector performance. Completion of the
EDR Closing Form 8.3-F-02-VID is not required.

1.2 The EDR scope extends to include correction/ rectification of deficiencies in case
of direct purchase orders placed by Saudi Aramco. Inspection Department
(ID)/Vendor Inspection Division (VID) role is limited to investigate the
deficiencies with the vendor and close the EDR when the Originator organization
confirms that the correction/rectification is satisfactorily completed.

2 Objective

The objective of the EDR is to report fabrication/manufacturing deficiencies, identify

root causes, correct/rectify deficiencies for direct purchase orders, and ensure
acceptable and effective corrective actions are implemented in vendors’ and/or
inspection agencies’ quality management system.

3 Applicable Documents

3.1 Saudi Aramco References

Saudi Aramco Engineering Procedures

SAEP-301 Instructions for Establishing and Maintaining Mandatory
Saudi Aramco Engineering Requirements
SAEP-379 Quality Issues Notification
SAEP-381 Project Quality Issues Escalation Process
SAEP-397 Vendor Performance Escalation
SAEP-1150 Inspection Coverage on Projects
SAEP-1151 Inspection Requirement for Contractor Procured
Materials and Equipment

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

3.2 Industry Code and Standard

International Standardization Organization

ISO 9001 Quality Management System Requirements

4 Definitions and Abbreviations

Corrective Action: An action taken to eliminate the root causes of an existing

nonconformity.

Correction: An action taken to rectify manufacturing defects.

Customer Relationship Management (CRM) Request: An online portal that enables

customers/users to submit their request electronically.

Deficiency: Equipment/ material received at project site/operating facility with

nonconformity to purchase orders/ applicable mandatory Saudi Aramco engineering
requirements (MSAER’s) or with apparent defect.

Direct Purchase Order: A purchase order placed by Company/Saudi Aramco to

Vendor to supply certain commodities/services to Saudi Aramco projects/facilities.

EDR Coordinator: An individual assigned by the Inspection Department (ID)/Vendor

Inspection Division (VID) to coordinate EDR management.

EDR Originator: An individual who reports manufacturing defects observed in

project site/operating facility by creating EDR through the SAP.

ETC: Estimated Time of Completion

General Supervisor: Operating Facility Supervisor level responsible for the area
where the defective material is observed.

Indirect/Contractor Purchase Order: A purchase order placed by Contractor to

Vendor to supply certain commodities/services to Saudi Aramco projects/facilities.

Inspectable Material: Items deemed critical to Saudi Aramco operations by the

Inspection Department in terms of quality, reliability and safety. In addition, items
which may have an impact on the health and well-being of Saudi Aramco employees, as
determined by the Environment Protection Department (EPD) also fall under the
definition of inspectable items.

Inspectable materials are also classified by the Inspection Department (ID) in

coordination with the Responsible Standardization Agents (RSA) as follows:
 Category A (IDCAT-A): Material procured under this category are required that

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

they are visually inspected (per the applicable Inspection Plan “SA-175 form”) and
released for shipment by the assigned Inspection Office. It is also required that
these materials are procured from approved manufacturing plants. These materials
should be linked to the applicable inspection plan “SA-175 form”.
 Category B (IDCAT-B): When materials under this category are procured, it’s a
requirement that the Inspection Office reviews the certificates (as per the applicable
inspection plan “SA-175 form”) and releases the materials for shipment. It is also a
requirement that these materials are procured from approved manufacturing plants.
These materials should be linked to the applicable inspection plan “SA-175 form”.
 Category C (IDCAT-C): When materials under this category are procured,
inspection is not required (i.e., no visual inspection and no certificate review).
However, it is required that these materials are procured from an approved
manufacturing plant. These materials should not be linked to any inspection plan
“SA-175 form”.
 Category S (IDCAT-S): When materials under this category are procured, it is
required that they are visually inspected or certificates are reviewed (as per the
applicable Inspection plan “SA-175 form”) and the materials are released for
shipment by the assigned Inspection Office. This category is applicable for
inspectable spare parts only. Approval for manufacturing plants supplying these
materials is not necessary (to allow procurement of spare parts to run existing
equipment purchased from a supplier who might be put on hold). These materials
should be linked to the applicable inspection plan “SA-175 form”.

Mandatory Saudi Aramco Engineering Requirements (MSAER): Requirements

that include engineering standards (SAESs), materials system specifications (SAMSSs),
engineering procedures (SAEPs) and standard drawings (SASDs) that are developed for
uniformity and applied Company-wide.

Material: For the purpose of this document, material is defined as the final
product/equipment/service supplied by Company approved vendors.

Nonconformance Report (NCR): A document issued by Company or Contractor

identifying the deficiencies or non-conformities of a product, material or service
supplied by Vendor or Contractor. The NCR could be one of the following:
NCR: Non Conformance Report (Issued by Saudi Aramco through SAP QM).
INCR: Internal Non Conformance Report (Issued by Contractor)

Non-Inspectable Material: Any material that do not fall under any of the categories
A, B, C, or S defined herein under Inspectable Material.

PQM: Project Quality manager responsible for planning, executing and controlling all

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

quality management activities on the project.

PQL: Project Quality Leader assigned for small/medium or group of small projects.

QAU: Quality Assurance Unit

Responsible Inspection Office (RIO): Quality Control Unit of ID in Dhahran,

AOC-The Hague, Aramco Asia - Tokyo or ASC-Houston.

SAIR: Saudi Aramco Inspection Representative responsible to ensure quality of

Contractor-supplied material.

RSA: Responsible Standardization Agent from Saudi Aramco Central Engineering

Vendor: A manufacturer, producer, or an organization that supplies materials and/or

services to Company.

5 Deficiency Classification

PQM, PQL or General Supervisor is responsible to classify the deficiencies at the stage
of reporting an EDR as either major or minor. Deficiencies shall be classified as major
if one of the following conditions applies, otherwise, minor classification shall be
assigned:

5.1 Deficiencies that put quality and integrity of the project/facility including its
workers and equipment at risk. That is, the deficiencies that prevent putting a
facility in operation as they represent, if not corrected, an evident danger to
Company property or personnel safety, and those that may impact the safe
commissioning, start up, and operation of the facility.

5.2 Actions that violate the corporate values such as submitting forged items and/or
counterfeit materials.

5.3 Minor EDRs repeated for the same deficiency with the same vendor.
Note: Major EDRs shall be escalated in accordance with SAEP-397 and shall not be
closed until the Vendor Escalation Process is completed.

6 Instructions

6.1 The EDR process is not intended to correct/rectify deficiencies for

indirect/Contractor’s purchase orders. Instead, correction/ rectification of
deficiencies shall be through non-conformance reports.

6.2 EDR shall be initiated by Originator for deficiencies observed at project

site/operating facility according to Table 1, Appendix B.

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

Note: First time originator must complete the online EDR course number 40080017.

6.3 For indirect orders, EDR shall only be issued after an NCR/INCR has been
reported already.

6.4 EDR shall be completely created in SAP-QM to include all required fields listed
in paragraph 7.1.4.3.

6.5 Major EDRs shall be submitted by PQM, PQL or General Supervisor while the
minor ones are acceptable to be submitted on unit supervisor level.

6.6 SAP tasks will be assigned to RIO to kick off investigation with the vendor.

6.7 The EDR investigation may require RSA input if technical feedback is deemed
necessary by RIO.

6.8 Implementation of corrective actions resulted from the investigation shall be

verified by RIO.

6.9 Upon confirmation of corrective action implementation, EDR Closing Form

8.3-F-02-VID shall be completed, signed, and attached to SAP-QM.

7 Responsibilities

7.1 EDR Originator

7.1.1 Make sure an NCR/INCRs has been issued for deficiency correction /
rectification in case of indirect purchase order.

7.1.2 Evaluate the deficiency as per Table 1, Appendix B based on which the
Originator decides whether to issue an EDR or not.
Note: If the deficiency is not listed in Table 1, Appendix B, PQM/PQL/GS and
SAIR, as applicable, need to evaluate whether the vendor caused the
deficiency. If yes, the deficiency should be considered as an EDR
case. Originator is always recommended to discuss the selected
deficiency with EDR Coordinator.

7.1.3 Obtain procurement NCR/INCRs issued during manufacturing stage

from SAIR, as applicable, to be used as an input to RIO investigation.

7.1.4 Shall create the EDR in SAP-QM with following conditions:

7.1.4.1 The receiving inspection NCR/INCR and the procurement

NCR/INCRs shall be attached in SAP-QM, as applicable.

7.1.4.2 The purchase order, and photos of the defects and the defective
material shall be attached in SAP-QM

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

7.1.4.3 All necessary fields/information including the following must

be filled to consider the EDR information as complete: quantity
of defective material, NCR/INCR#, deficiency classification,
defect type (as per Table 1), violated specifications, Contractor
PO number, Saudi Aramco Dummy PO number, Saudi Aramco
PO number, 9COM, Inspection Lot, Contractor number and
address, vendor/manufacturer plant number and address, and
10 digits WBS#.

7.1.4.4 Include, as applicable, PQM/PQL/GS, Sr. Project Engineer ,

SAIR, and the inspection agency as interested parties.

7.1.5 Issue only one EDR for defective materials/equipment manufactured by

the same vendor. An EDR will be considered “Duplicate” in the
following scenarios:
 The defective materials/equipment are identical even though they
have different tag numbers and purchased thru a single purchase
order. The Originator will list all tag numbers with their respective
deficiencies.
 The defective materials/equipment are identical and purchased thru
multiple purchase orders with the same vendor under the same
project/facility. The Originator will combine all materials/equipment
in one EDR and list all their respective deficiencies.
 There is an ongoing investigation with the vendor as a result of an
EDR issued for the same project/facility and the same
materials/equipment. The Originator shall work with the EDR
Coordinator to update the existing EDR and notify the RIO
accordingly.
Note: Duplicate and/or Incomplete EDR (paragraph 7.1.4) will be rejected
by the EDR Coordinator.

7.1.6 If Originator decides to cancel/withdraw an EDR, a valid justification

acceptable to PQM/PQL/GS shall be submitted to EDR Coordinator and
mentioned in SAP-QM as a note.

7.2 Project Quality Manager/Leader/General Supervisor

7.2.1 Make sure that NCR/INCR has been issued prior to reporting the EDR.

7.2.2 Review the EDR and classify the deficiency as “Major” or “Minor” as
per Section 5.

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

7.2.3 Submit major EDRs immediately after the Originator has created it in
SAP-QM. EDRs left with created status (SAP status “CRTD”) for three
(3) business days will be archived and Originator will be required
reinitiate and the EDR once again.

7.3 Saudi Aramco Inspection Representative

7.3.1 Make sure that the vendor is approved at the stage of issuing the EDR.

7.3.2 Review and acknowledge the EDR via an email to EDR Coordinator.

7.3.3 Provide the needed purchase order information such as inspection lot
number, 9COM, …, etc., to the Originator.

7.3.4 Provide the Originator with all procurement NCR/INCRs for the
defective equipment during manufacturing, as applicable.

7.3.5 Upon completion of any EDR, SAIR will use the EDR Closing Form
contents to prepare and log a lesson learned in VID Lesson Learned
ShareK website.

7.4 EDR Coordinator

7.4.1 Make sure all necessary information and documents for the defective
material are completed and in line paragraph 7.1.4. If not, EDR
Coordinator will reject the EDR immediately, report the reason of
rejection to PQM/PQL/ General Supervisor, and document the rejection
in SAP-QM.

7.4.2 Obtain and document SAIR acknowledgement on SAP-QM.

7.4.3 Approve and assign the EDR tasks on SAP-QM to the Responsible
Inspection Office EDR Coordinator to start the investigation. If the
deficiency involves more than one vendor located at different RIO areas,
the tasks will be assigned to the RIO responsible for the final release of
the material.

7.4.4 If RIO investigation reveals that the deficiency was not caused by the
vendor such as transportation, site preservation, etc. EDR Coordinator
will reject the EDR and will make sure that all supporting documents are
attached to SAP-QM.

7.4.5 Prepare a monthly EDR status report and submit it to RIO Supervisors and
copy to QAU Supervisor and VID Superintendent.

7.4.6 Complete the EDR on SAP-QM after RIO completes the EDR Closing

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

Form 8.3-F-02-VID.

7.4.7 Share the completed EDR Closing Form 8.3-F-02-VID with the
Originator.

7.4.8 Attach EDRs for non-inspectable material to SAP-QM Vendor Master

and archive them accordingly.

7.5 Responsible Inspection Office Supervisor

7.5.1 Assign a Responsible Inspection Office EDR Coordinator to

communicate with EDR Coordinator and distribute the tasks to the
Responsible Inspection Office Inspector.

7.5.2 Review the monthly EDR status report and take actions accordingly to
ensure appropriate management of EDRs and ensure the EDR tasks are
completed within eight (8) weeks of the initial task assignment date or
within an agreed-upon date with a documented valid justification.

7.5.3 Review vendors’ corrective actions, may initiate vendor evaluation and
decide based on that whether the vendor approval status should be
changed in line with the Vendor Performance Escalation process.

7.5.4 Review and approve the EDR Closing Form 8.3-F-02-VID and provide
feedback to the vendor accordingly.

7.6 Responsible Inspection Office EDR Coordinator

7.6.1 Represent RIO as the focal contact to communicate with the RIO
inspector and EDR Coordinator.

7.6.2 Receive tasks from EDR Coordinator and assign them to the RIO
Inspector.

7.6.3 Should assign or make sure that RIO Inspector assigns ETC to the EDRs
into SAP within five (5) working days of receiving the tasks from EDR
Coordinator.

7.6.4 Should ensure that the EDR status update is documented into SAP-QM
on bi-weekly basis.

7.6.5 Follow up with RIO inspector to ensure that the EDR tasks are
completed within eight (8) weeks of the initial task assignment date or
within an agreed-upon date with a valid justification. The justification
needs to be approved by RIO Supervisor and communicated to EDR
Coordinator in order to change the EDR completion date on SAP-QM.

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

Note: Examples of valid justifications include:

1. Delayed response by the vendor and/or by other Saudi Aramco

organizations.
2. The vendor requires the defective materials to be shipped back to
its facility for investigation.
3. Investigation requires third party inspection and testing.
4. EDR for direct orders as the EDR cannot be closed unless
rectification of deficiency has been found satisfactory by the
Originator organization.
5. EDR escalated in accordance with SAEP-397.

7.6.6 Make sure that the signed EDR Closing Form 8.3-F-02-VID is attached
and notify EDR Coordinator to close the EDR accordingly.

7.7 Responsible Inspection Office Inspector

7.7.1 Review the tasks assigned by RIO EDR Coordinator and should assign
an ETC within five (5) working days.

7.7.2 Should provide at least bi-weekly update by creating a note into

SAP-QM for each EDR. A fresh note should be assigned even if there is
no change in status to ensure the EDR is duly monitored. Even with no
change in status a fresh note will provide a positive indication that the
EDR status is being monitored.

7.7.3 Review the deficiency against the purchase order requirements and
contact EDR Coordinators, vendor, etc., as necessary to understand the
nature of the deficiency. RIO Inspector may need to conduct a physical
inspection on the defective material in case the material is returned to the
vendor’s shop floor for further investigation.

7.7.4 Conduct investigation with the vendor and/or inspection agency, as

applicable, and obtain the root cause analysis and the corrective actions.

7.7.5 When the root causes and corrective actions require technical expertise,
RIO Inspector or RIO EDR Coordinator will create a CRM request to
seek RSA feedback based on which the vendor shall revise the root
causes/corrective action, as applicable, and attach the CRM with the
singed EDR Closing Form 8.3-F-02-VID in SAP-QM.

7.7.6 If the investigation reveals that the deficiency is not caused by the
vendor, EDR Coordinator will reject the EDR or archive it if the
deficiency is found caused by transportation.

7.7.7 Review the corrective actions plan with RIO Supervisor.

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

7.7.8 If the corrective actions plan or its implementation is unaccepted,

RIO Supervisor may initiate a physical plant or desk assessment and
shall follow Vendor Performance Escalation Process as applicable.

7.7.9 RIO Inspector shall not complete the EDR Closing Form 8.3-F-02-VID
until the accepted corrective actions plan is duly implemented or the
escalation process is completed, as applicable. Once the form is
completed, RIO Inspector/RIO EDR Coordinator shall immediately
complete the tasks of the EDR notification in SAP-QM, attach the form,
and notify both RIO EDR Coordinator and EDR Coordinator.

Revision Summary
10 December 2015 Major revision as a result of a comprehensive six sigma study targeting reduction of number
defective material received at Saudi Aramco projects. The study revealed that improvement
is required in the EDR reporting phase where plenty of EDRs were rejected, investigation
phase where several EDRs found with incomprehensive/incomplete investigations, and in the
closing phase where EDRs were closed without acceptable and documented root cause
analysis and corrective actions.

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

Appendix A - EDR Process Flow Chart

Process Flow Responsibility

Deficiency Observed

Issue NCR/INCR

Evaluate the case

No
Do not issue EDR EDR Case Origniator

Yes

Collect Procurement NCRs

Complete EDR on SAP-QM

Create EDR on SAP-QM

Submit EDR* PQM/PQL/GS

Inspectable No Attach EDR to SAP Vendor

Material Master

Yes EDR Coordinator

Archive EDR
Assign Tasks to RIO

Review Corrective Actions

Yes

RSA Input
Yes
Initiate CRM Request
Required

No
RIO

No
Verify satisfactory
plan/ Evaluate Vendor/Escalate
implementation** Issue**

Yes

Complete Form # 8.3-F-02-VID

Complete EDR EDR Coordinator

*Only Major EDRs, Minor EDRs will be submitted by Unit Supervisor

**Refer to para. 7.7.8, 7.7.9.

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

Appendix B - EDR Deficiency List

Table 1 - EDR Deficiency List

No. Deficiency EDR Not EDR Remark

1 Base Metal-Incorrect X
2 Bends/Dents-Component/Auxiliaries X EDR is valid unless it is caused by transportation/site handling
3 Bends/Dents-Main Body X EDR is valid unless it is caused by transportation/site handling
4 Coating-Defect X Such as bonding, surface condition, thickness, & curing
5 Coating-Incomplete X
6 Coating-Incorrect Coating System X
7 Component-Incorrect Type X
8 Component-Missing X
9 Component-Not Functional/Defective X
10 Crack-Component/Auxiliaries X
11 Crack-Main Body X
12 Design Error/Accessibility X Such as inaccessible gauges
13 Dimension-Incorrect X
14 Documents Forging/Falsification X
15 Dry Out X Such as residual water in tubes
16 Failure during Commissioning/ Site Test/Operation X
17 Installation/Fabrication Error X Such as nozzle orientation
18 Insulation-Defect X
19 Insulation-Incorrect Type X
20 Leak-Body X
21 Leak-Bolted Joint X
22 Leak-Seat X
23 Leak-Welding Joint X
24 Missed test during manufacturing X
25 Missing documents/records X
26 Missing tags X
27 Nameplate-Defective/Missing/Incomplete X
28 Non-Inspectable Material X EDR will be archived for future analysis
29 Not approved vendor X
30 On-Hold (QSOH or QSNA) status Vendor X EDR will be archived for RIO consideration during reinstatement
31 Packing Damage X
32 Pinhole-Component/Auxiliaries X
33 Pinhole-Main Body X
34 Preservation-Insufficient/Missing Chemical X
35 Punch Items List X EDR is invalid if standard violations punch items were approved by RSA
36 Rust-External X
37 Rust-Internal X
38 Site Preservation Related Defects X
39 Software Fault X
40 Traceability- Main Body Incorrect Marking X
41 Traceability- Main Body Missing Marking X
42 Traceability-Component Incorrect/Missing Marking X
43 Transportation Related defects X EDR will be archived for future analysis
44 Welding-Defect X
45 Welding-Incomplete X
46 Others…please specify Decided jointly between SAIR and PQM

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Document Responsibility: Project Quality Standards Committee SAEP-380
Issue Date: 10 December 2015
Next Planned Update: 10 December 2018 Equipment Deficiency Report

Appendix C - EDR Closing Form 8.3-F-02-VID

Form# 8.3-F-02-VID Rev 0, 11/16/2015

Equipment Deficiency Report

Closing Form
Closing Date: Issuance Date: Completion Time: Week
EDR# Contractor's PO No. Aramco PO No. Material Description 9COM's

Inspection Lot # Manufacturer Name Plant ID Vendor/Contractor Name Vendor ID

Project BI/JO Project Name/Facility Name RIO Inspector/Engineer Login ID Tel. No.

Description of Deficiency

Root Cause
CRM# :

Corrective Action
Correction/Disposition:

Preventive Measures:

S ignatory
Role Name Signature Date
RIO Supervisor

VID Superintendent*

* Signatory is needed if the EDR was classified as "Major"

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