VERTICAL CONTRACT AUDITS (VCA)

GENERAL

Application

This procedure is applicable to the Marine & Offshore Product Line activities in the network performing Classification and Statutory Certification services and in particular to the activities' responsible HO Departments, to T&OE QHSSE Department and to the assigned VCA internal auditors who have the relevant knowledge on the technical domain being audited and the audit process.

References

The following documents are referenced in this procedure:

• IACS Procedures Volume 3: Quality System Certification Scheme (QSCS);

• IACS Quality Management System Requirements (QMSR);

• IMO MSC.349(92) and MEPC. 237(65), as amended - RO Code;

• the internal and external audits procedure - Internal and External Audits;

VCA ORGANIZATION

Definition and purpose

Vertical Contract Audit (VCA) is a combination of "process audit" and "product audit" with the main purpose of assessing the effectiveness of the service delivery process in ensuring product quality.

It is also a contract/order specific audit of production processes, including witnessing work during attendance at a survey, audit or plan approval in progress and, as applicable, including relevant sub-processes.

The scope of the VCA will be defined by a specific contract/order for survey, audit, inspection or plan approval as applicable at the audit location.

A VCA is carried out at a location and/or site to verify the correct application of relevant requirements in service realization for the specific work in that contract/order, and their interactions. (Relevant sub-processes include e.g. previous part surveys or thickness measurement processes connected to the survey).

VCAs are carried out by persons who have the relevant domain-knowledge, preferably with training and experience in the auditing of quality management systems and processes, this is why their planning is primarily managed by relevant HO Department's management. Please see 2.2 for more detail.

VCA's purpose is to:

1. Verify, in the selected contract / order, to the extent applicable at the audit location;

   • the correct application of Health & Safety requirement from the preparation to the performance of the survey / audit;

     the effectiveness of the process, especially in the interface of various parties and locations;

   • the correct application of the Rules and Regulations;

   • the correct application of relevant Statutory requirements of International Conventions;

   • the correct application of Flag specific requirements, procedures and reporting.

   • the conformance of the process to the applicable Recognised Organisation (RO) QMS procedures and other pertinent documents;

   • the correct application of international acceptance criteria for acceptance of the request for survey/ approval/ inspection;

   • the implementation of IACS technical resolutions (UR, UI, PR, CSR), as applicable;

   • the suitability of the recommendations or plan review comments and / or the instructions provided to the surveyor;

   • the observance of Recognised Organisation (RO) Code of Ethics;

   • the effectiveness of management control;

   • the quality and effectiveness of the service delivery.

2. Identify opportunities for improvement, if any, in the processes and sub-processes and their interactions.

Periodicity and planning

An Internal VCA Plan shall be prepared by each activity responsible H.O. Department management each year, defining the intended scheduled number and locations of the VCAs for the year. The yearly VCA schedule plan shall then be submitted to T&OE QHSSE Department for review and agreement.

Internal VCAs should be planned to ensure a representative geographic spread and that they are representative of the Recognised Organisation (RO)'s fleet and work profile. (Every effort should be made to avoid auditing the same location repeatedly within a short period of time. If that is unavoidable the scope of VCAs should be varied).Internal VCAs are considered on the basis of one or more of the following: a. Workload and types of work at the locations; b. Extent of work at geographic divisions; c. Importance / size / criticality of contracts; d. Results of previous audits, if any & relevant; e. Customer complaints / feedback, if relevant.Internal VCAs may be held more than once on the same contract if considered appropriate and beneficial by the CS. Internal VCAs may be combined with Internal Audits.When practical, Activity Monitoring of the surveyors executing the contract/order may also be carried out concurrently with Internal VCAs.

VCAs are initiated under the responsibility of each activity responsible H.O. Department management and any changes to the original agreed VCA planning for the year shall be informed to QHSSE Department in due time.

Internal VCAs shall be efficiently planned and carried out annually for each of the M&O activities listed below:

• PA (design review) - a VCA may be carried out for completed tasks and is considered equivalent to a report monitoring as defined in the local plan approval office procedure - “Organization and Responsibilities of LPOs”;

• New construction surveys of classed ships and offshore floating units - sufficient time is to be planned to be spent in the Site Office at the shipyard to review files relevant to key processes and sub-processes, the actual status of the survey progress, surveyor’s training and monitoring, control of approved drawings, control of comments, controls of welders, WPS/ WPQR, NDT, etc. Significant time should also be spent during a relevant survey on board, observing the surveyor going about his work (total time for a NC VCA to be 1.5 to 2.0 days);

• In-service surveys of classed ships and offshore floating units - preferably older than 10 years undergoing renewal (special) survey or intermediate surveys, sufficient time shall be spent with the surveyor who is actually doing the survey, discussing the program, what the stage of the survey progress is and what is planned for the day (total time for a NS VCA to be 1.5 to 2.0 days);

• ISM/ISPS/MLC audits (on board of ships or in Companies' offices) - sufficient time is to be planned to check preparation and discuss the program with the ISM/ ISPS/ MLC auditor, to check documentation for the company and ships with due attention being paid to the required individual audit duration for ISM/ ISPS/ MLC when multiple audits are planned simultaneously (total time for a System Audit VCA to be not less than 1.0 day);

• Type approval and/or other material and equipment inspections - sufficient time is to be spent with the surveyor who is actually doing the survey, discussing the program, what the actual status of the survey progress is and what is planned for the day. Significant time shall be also spent on site, observing the surveyor going about his work (total time for a RO VCA to be not less than 1.0 day).

VCAs may be combined with other internal audits as defined in the internal and external audits procedure and/ or Surveyor's Activity Monitoring and should be planned to be held at specific stages of a contract e.g. (but not limited to): planning, commencement of surveys or plan approval, other relevant in-process stages like: just prior launching/ delivery, prior to undocking, on completion of approval of major drawings / calculations, prior to final test and trials, etc.

VCAs may be replaced, on a case by case basis, by a regular Internal Audit which is a Process Audit as defined in the internal and external audits procedure, upon QHSSE Department agreement with adequate justification.

Method

VCAs shall take place onboard ships or offshore units afloat and/ or in field offices at repair yards and/ or at shipbuilders' sites and/ or at manufacturers' premises. They may be completed by a visit to a main local Recognised Organisation (RO) office and/ or the concerned LPO in case of newbuildings.

VCAs shall be carried out by persons who have the relevant knowledge on the domain and, additionally, the knowledge in quality management systems audits and the audited activity processes, being duly assigned by the activity responsible H.O. Department for the each VCA.

The list of auditors are kept within QHSSE Department for all activities.

Specific requirements established by each activity responsible H.O. Department may also be available to internal auditors as additional provisions for performing the VCAs.

The detailed information on the use of NEXUS can be found in the guidelines attached to this procedure ‘NEXUS user guide for Auditors and Auditees”.

Audit scope

When selecting suitable VCAs, consideration shall be given to the “IACS - IQARB Focus Areas” established for the year which should be also verified during the VCA, as deemed applicable.

The scope of a VCA is defined by the specific contract/ order for survey, audit or plan approval as applicable and chosen by the auditor as a sample of the work carried out at the location or site.

A contract may be for new construction, including design review and surveys, or a frame agreement for in-service surveys and/ or audit, or a frame agreement for survey and certification at an equipment/ material manufacturer or it may be a specific request for a survey, audit or design review.

The scope may include relevant sub-processes or related production processes relevant to that particular Contract. Typical sub-processes may be e.g. previous part surveys to the same survey, service supplier processes connected to the survey (e.g. UTM, radio inspection, diving survey), interaction between different design review disciplines, etc.

The scope will normally be limited to the activities carried out at the location or site, and by the activities planned at the time of the audit.

The VCA shall cover the following steps, as deemed applicable, depending on the progress of the work relevant to the main process for the specific work being audited:

1. Request processing;

2. Allocation of competent and qualified surveyors;

3. Review of supporting documents, ship file, relevant drawings, etc.;

4. Review of the surveyor's notes and other documentation relevant to the progress of the work;

5. Review of work / test reports and recordings;

6. Verification that Safety conditions and relevant requirements have been respectively identified and implemented;

7. Implementation of relevant sub-processes, as applicable;

8. Review of the actual services delivered by a visit on board/ site;

9. Interviews with the attending surveyor and, if necessary, the location manager;

10. Any additional matter deemed relevant to the location or site.

Audit report

VCAs reports are issued through NEXUS according to the audit checklists available for each activity.

The information to be recorded in NEXUS shall include, but is not limited to, identification of the project (ship number & vessel type, job number, RO project number, etc.), date and place of the VCA, ship's Recognised Organisation (RO) number, IMO number or contract / order number audited, as applicable, the status of the survey activity at the time of the audit, the names of the auditor and the attending surveyor(s).

VCA findings, together with the appropriate corrective actions, are also to be entered in NEXUS for further follow-up and closing of the VCA.

For further information on the use of NEXUS for recording and follow-up of a VCA, refer to appropriate Sections of the internal and external audits procedure and the ‘NEXUS user guide Auditors and Auditees’ attached to this procedure.

Audit follow-up

Audit processing, preparation, performance, data recording, reporting, corrective actions and follow-up are referred to in the appropriate Sections of the internal and external audits procedure.

Escalation process

Please refer to Section 2.5 of the internal and external audits procedure - Internal and External Audits.

Analysis of data

Findings raised during a VCA may be used by the activity responsible HO Department management to identify process/ system improvements and, if applicable, to identify suitable future audit locations and types of VCAs.

The outcome of the VCAs may be one of the inputs to the Management System Review, ensuring added value to the overall yearly internal audits programme.