Operating companies buy materials worth million of dollars every month. There are numerous cases where materials received are not as per the requirements and this results in significant losses in terms of down time and costs of corrective actions required to procure the desired materials.

In the oil and gas industry many operating companies have reported that the lack of "fitness for purpose" due to non-conformances costs more than 10% of equipment costs. Users, engineers, purchasers & inspectors of materials need to give the proper attention which material procurement deserves. Necessary care is required in preparing buying description/selecting specifications of the materials and on improving methods of procurement, inspection, traceability, certification and re-certification. Third Party Inspection (TPI) is a powerful tool to ensure quality of purchases made by a company. TPI, if properly applied, prevents cost and time over-runs. For TPI to be effective, in proper methodology has to be followed at various procurement stages.

This paper describes the ADCO's activities in ensuring that procurement quality is achieved in a cost and time effective manner. The use of materials certification is also explained. There is a discussion on what to look for in a material certificate and why material certificates are rejected.

The paper also describes issues relating to management of TPI activities and various ADCO initiatives to improve procurement quality.


Source inspection of suppliers on behalf of the purchaser by his designated representative is termed "Third Party Inspection" (TPI).

It is most cost effective to verify the quality/acceptability of the purchased materials by witnessing certain key suppliers' manufacturing activities and reviewing/checking the results of the required supplier quality control checks.

Third party inspection can provide benefits if the proper purchase specifications are used and the TPI scope is clearly defined.

ADCO's Third Party Inspection Section has arranged TPI services for 779 purchase orders (up to April 1996) aggregating to 335 Million US Dollars in the past 6 1/2 years. In addition during this period-materials and equipment for over 1,500 purchase orders were accepted based on Materials Certification.

In this paper ADCO's methodology on the subject is stated through the following topics:

  • material inspection procedures:

  • specification control;

  • philosophy of quality and inspection requirements;

  • procurement quality control;

  • standardised inspection requirements:

  • materials certification;

  • selection and monitoring of TPI agencies:

  • improvement initiatives;

  • strategies that worked.


The following material inspection procedures are used in ADCO for TPI services:

  • QAC/MI-00: Inspection requests - Routing

  • QAC/MI-01: Specification of quality and inspection requirements.

  • QAC/MI-02: TPI selection and appointment.

  • QAC/MI-03: TPI monitoring and control.

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