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The Risk of Importing Hazardous Area Vendor Packages

Managing the Risk of Importing Hazardous Area Vendor Packages

Having hazardous area packages built overseas comes with the benefit of engaging foreign workforces usually at a significantly discounted rate to the equivalent Australian labour. This, at face value is a clear benefit but brings with it an increased risk resulting from the limited compliance and quality knowledge required to successfully commission equipment in the oil and gas sector in Australia.

There are multiple stories in the industry of vast amounts of rework and repairs having to be completed on hazardous area vendor packages that according to the supporting documents have had sufficient oversight by Australian engineering and electrical workers during the design and construction stage overseas.

A well-managed supplier quality surveillance system should bring great benefit to the end user at a relatively low cost. Errors at the early stage of the project accumulate and compound and can lead to major compliance issues when it comes time to ship the completed packages. These errors should be easily identified by competent people and rectified before they become significant and costly issues. Some of the common problems that exacerbate the issues include:

  • Poorly written tender and scope documents that do not cover in sufficient detail the works required, the required outcomes and the quality and compliance standards to be achieved.
  • Language barriers including the use of country or regionally specific technical terminology and poor-quality translations.
  • Limited understanding of the regulatory frameworks that underpin Australian hazardous area compliance. This often incudes a lack of understanding about the relationship of Australian and international standards and their link to legislation.
  • Long distance communication mediums such as emails or video conferences.
  • Engaging unskilled factory workers rather than tradespeople for construction of vendors packages in the country of origin.
  • Poor staff management of factory and construction workers at the vendors facility.
  • Poorly developed quality management systems, or in some cases a total lack of quality management systems at all.
  • Poor, or in some cases no training of foreign workers on the design, installation and commissioning requirements of hazardous area systems for use in Australia.
  • Failing to recognise regional differences between Australian and IEC standards. This is also compounded by no exposure to AS/NZS 3000.
  • Employing engineering, auditors and inspection staff with limited experience working in the field of hazardous areas to provide project oversight and surveillance programs.

A good supplier quality surveillance system should be tailored to the specific needs of the end user and the knowledge and skill sets of the equipment vendors. This will ensure the equipment is manufactured to the onerous tolerances and specifications required in the Oil and Gas sector. The following items should be assessed and reviewed as part of the ongoing vendor surveillance:

  • Design review and approvals
  • Vendor quality management systems,
  • Vendor health and safety systems,
  • Vendor supply chains and material quality,
  • Project timelines, milestones and associated planning,
  • Contingency and risk mitigation strategies,
  • Staff competencies and training,
  • Witnessed testing,
  • Equipment calibration and testing procedures,
  • Inspections plans and quality surveillance,
  • Approval process,
  • Final Factory Acceptance testing.

These supplier quality surveillance systems can have huge cost savings but will ultimately fail if the right people are not put in place to implement and monitor them. Vetting the competency of the staff completing the supplier quality surveillance is critical. Compliance and quality issues can only be detected by staff with a detailed understanding of the equipment and the Australian standards that govern their compliance. Putting the right people in place with the correct attitude, people skills and compliance knowledge is the most critical step in ensuring your supplier quality surveillance is managed correctly.

Contact Lithium Oil and Gas to find out how we can help.

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