Assessment of Subcontractors

Stroygazmontazh develops proprietary system to evaluate quality of work by subcontracting organizations

The rules on technical oversight of construction works have been thrown into a quandary. Beginning in 1997, with the passage of the federal law “On Industrial Safety at Dangerous Manufacturing Sites” № 116-F3 dated July 21, 1997, contracts for long-distance pipeline construction projects were required to contain a provision for independent technical oversight of construction works. In other countries, this principle is referred to as third-party oversight. Typically such oversight was provided by a company that was independent of the project owner and the contractor, to ensure maximum objectivity of oversight results. The company performing oversight obtained all licenses and permits required for the work. If a project owner wished to bring in its own subdivision, that subdivision must be accountable only to the chief executive officer.
Details of independent technical oversight along with requirements for structure and order are described in the Rostehnadzor (Russian Technical Oversight Service) document RD 08-296-99, “Guidelines for Organization of Technical Oversight of Project Design and Construction Quality, Structural Repairs, and Reconstruction at Long-Distance Pipelines.”.
In 2007 a new edition of the City Planning Code of Russia was adopted. It is silent on the matter of technical oversight. The code, however, introduces a new term: construction oversight – a mandatory procedure for construction of buildings, reconstruction works, and structural repairs of industrial and civil sites. Construction oversight is charged with confirming that construction works are completed in accordance with project documentation, technical requirements, the city plan, and engineering findings.
As provided in the code, construction oversight is conducted by the company that carries out the construction. Control may be organized by the project owner or, under agreement with the owner, contracted to a specialized organization. (Previously, this function was performed by the bodies of technical oversight).
Hence current legislature moves technical oversight into construction oversight, making it an optional feature. The abovementioned “Guidelines for Organization of Technical Oversight…” were canceled. At present no normative documents exist for conducting technical oversight.
The largest Russian oil and gas companies, Gazprom and Transneft among them, have not abandoned project owner-administered technical oversight of pipelines construction; indeed, they are requiring general contractors to tighten construction oversight.
Stroygazmontazh is one of the leading companies in gas pipeline construction in Russia. As general contractor for numerous large projects, we always strive to achieve high quality in construction and installation work. To ensure that we do so, the company has set up a special Quality Control Service. The duties of this team include the following:

• Supervision of our contractors’ quality control teams and coordination of their activities
• Initiation, organization, and management of measures designed to ensure compliance with normative documents and project solutions
• Analysis of construction technologies and equipment to select the most advanced.

Quality Control Service employees work at construction sites full time, performing the functions of technical oversight for the general contractor. Their activities full reflect the news trends in construction quality oversight stipulated in the City Planning Code.
Currently Stroygazmontazh specialists are developing in-house guidelines for conducting construction process control and technical oversight, since the essential regulations are absent, as noted above. New documents will be developed for each property the general contractor builds. Then they will be discussed and, if necessary, revised with the project owner and forwarded to the subcontractors.
According to Gazprom’s STO standards, there is a different set of requirements for each property. For instance, when laying pipes for the North European Gas Pipeline pipe edge defects repair are prohibited. On the Pochinki-Gryazovets pipeline, those repairs are permitted. Such fine points are reflected in the Stroygazmontazh’s regulations as well. Whenever it issues new standards, the Quality Control Service prepares a brief description and distributes it to subcontractors. In addition, the company conducts seminars, advisory sessions, and knowledge testing for our subcontractors’ employees.
Stroygazmontazh has implemented its system of assessing subcontractor’s works based on recommendations contained in international, national, and industry quality standards. In particular, the company follows special guidelines used monthly by the quality control team to evaluate the quality of work completed by subcontractors. The assessment is performed at the construction site by calculating penalty points for each division for the reporting period. When calculating penalty points, the following is taken into consideration:

• Number of citations and comments issued by technical oversight inspectors, state and industry oversight bodies, as well as the quality control team of the general contractor. If one citation lists several violations, each one of them is counted, but each one is valued differently based on how serious it is. (See Table 1.)
• Number of uncorrected citations – only those whose correction time extensions were not agreed with the project owner and technical oversight inspector
• High level of defects in welding work and the volume of repairs to remove the flaws
• Forgery of radiographic films.

Table 1

Number of Penalty Points Depending on the Type of Violations

№	Violation Description	Number of Penalty Points	Comments
1	Citation that was not corrected ontime	5	Without issuing arespective permit
	Comment that was not implemented ontime	3
2	Number ofrepaired joints per month exceeds 4%ofall welded joints	2
	Number ofjoint defects per month exceeds 3%ofall welded joints	3
3	Citation (comment) regarding:		Every violation listed inthe citation, ifmore than one
3.1	Work stoppage	5
3.2	Violation oftechnology (welding, insulation, pipe-laying) requiring that work bere-done	2
3.3	Untimely orincorrect preparation ofexecuting documentation	3	Documents must becompleted within five days after completion ofwork
3.4	Violation ofdeadlines:
	— Specialists’ attestations (re-attestations	1
	— Inspections ofinstruments	2
3.5	Violation oflabor safety rules	4	Violations threaten the life orhealth ofpeople
3.6	Violation ofrequirements for environmental protection	1
3.7	Violation ofrequirements for work inanature/architecture preservation zones	3
3.8	Absence ofproject ortechnical documents (pre-project work, technical maps) at the construction site	1
4	Forgery ofradiographic images	20	Replacement ofimages ofunacceptable joints with images ofacceptable joints

A representative of our Quality Control Service develops findings emanating from the assessment of the subcontractor’s work. He/she then reaches agreement with the project manager on its content and passes it to the chief engineer for review and approval. A subcontractor’s representatives may appeal these conclusions by addressing the management of the general contractor with a proposal to re-assess the quality of their work. An assessment is considered satisfactory when the sum of the penalty points is below 20. At 20 points or more, the assessment is considered unsatisfactory. If, over the course of three consecutive months, the quality of work of a subdivision found to be unsatisfactory, the general contractor has the right to request replacement of the working team and/or the manager of the work; in isolated cases, he may even request that the agreement with the subcontractor be terminated.
Our quality control team have been doing monthly assessment of their partners’ and colleagues’ work for the past six months following these procedures. . It should be noted that none of the subcontractors has received more than the maximum allowable number of penalty points – typically their sum does not exceed 12-14 points. We already see leaders and those lagging behind. We are working with those who have fallen behind to eliminate past and prevent future violations.
At Stroygazmontazh we are confident that the new system for evaluating work will to improve the quality of construction and installation in general, and give us a more objective approach to subcontractor selection.