GROUP BUSINESS GUIDELINES

(Confidential - Not to disclose without authorization)

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CONTENT

1. OBJECTIVE 3
2. SCOPE AND RESPONSIBILITY 3
3. REFERENCE DOCUMENTS 4
4. DEFINITIONS 4
5. DEVELOPMENT OF THE PROCEDURE 5
5.1 Process Overview 5
5.2 Supplier Pre-Qualification Questionnaires: 6
5.3 Decision Tree for Surveys & Audits 7
5.4 Supplier Pre-Qualification Surveys 8
5.5 Supplier Qualification Audits (Project Level) 9
5.6 Inspection Reviews & Project Audits 10
5.7 Safety in Audits & Surveys 11
5.8 Sustainable Development (SD) in Audits & Surveys 11
5.9 Availability and Sharing of Information 12
6. ACCESS TO DATABASE 12
7. APPLICATION FORMS AND TEMPLATES 12
8. PROCESS OVERVIEW 12

Prepared and reviewed within Task Force and with Steering Committee.
This version includes Regional comments.

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1. OBJECTIVE
The objective of this Guideline is to define the scope and content of the different Audits and Surveys
required for Supplier Pre-qualification and Qualification. It defines the circumstances under which the
various existing tools should be used that will lead to qualification of a Supplier, namely: Pre-
Qualification Surveys (FMECA or Technical type) and Qualification Audits.
It also makes recommendations for optimisation of Inspection Reviews and Project Audits during
Purchase Order execution and clarifies the input and output of various key activities in the Supplier
control chain of activities (See Table 1).
Through implementation of this Guideline, it is expected that the selection of Suppliers will be
improved and be more cost effective across the Group, that Audits and Surveys will be conducted with
a common understanding and that Reports will be shared effectively.
The purpose of these Surveys and Audits is:
- To select Suppliers that are clearly capable of meeting specified requirements,
- To highlight processes that may need to be strengthened or better controlled (either by Supplier or
by Technip),
- To ensure that Suppliers can manufacture under safe and socially responsible conditions.

2. SCOPE AND RESPONSIBILITY

This Guideline covers the selection of Suppliers of goods and services either for Projects or for
internal use (e.g. Capex) and applies to the entire Technip organisation.
As per GOPS 21004, placing Purchase Orders to qualified Suppliers is the responsibility of
Procurement who will seek input from other functions as appropriate:
- Engineering for preparing the Equipment Lists and Criticality Ratings and for participating in Pre-
qualification surveys and Qualification Audits as may be necessary,
- Inspection for conducting Technical Pre-Qualification Surveys and Inspection Reviews, for filing
reports in the Technip Supplier Database and for liaising with HSE and Quality on Projects.
- Quality for organising Qualification Audits with other functions as required and for filing reports
in the Technip Supplier Database.
- The Inspection Commodity Family Manager is responsible for maintaining a list of experts as a
function of business needs.
Procurement is further responsible for issuing and collecting Pre-Qualification Questionnaires and for
participating with Project Management in the evaluation of the Suppliers Manageability Rating prior
to final selection (Ref GL 20009).
All Survey and Audit Reports will include a clear recommendation (Ref GTDS 21007-4).

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3. REFERENCE DOCUMENTS
GOPS 21004 Qualification & Performance Assessment of Suppliers
GOPS 21005 Suppliers Quality Control Surveillance
GL 20009 Equipment & Material Criticality Rating
GL 10202 Introduction to FMECA Methodology

4. DEFINITIONS
Sourcing Visit: Initial visit generally led by a Procurement Representative to verify if a Supplier has
the potential to deliver goods and services typically procured by Technip. This may be supplemented
or replaced by a Pre-Qualification Questionnaire.
Pre-Qualification Questionnaire: Questionnaire sent to Suppliers in order to gather information that
will be useful in evaluating basic Supplier capabilities and in preparing Surveys & Audits.
Pre-Qualification Survey: Visit placed to a potential Supplier to assess its capability to execute a
specific scope of supply. Two types of Surveys are presented in this Guideline (FMECA and
Technical).
Audit: A systematic, independent and documented process for obtaining evidence and evaluating it
objectively to determine the extent to which the audit criteria are fulfilled.
Qualification Audit: Audit performed to validate use of a Supplier for a particular scope of supply.
Inspection Review: Meeting organized during execution of a Purchase Order and conducted by
permanent members of Inspection to ensure that the overall QC system at Supplier’s facilities is
correctly implemented, including QC coverage of components manufactured by Sub-suppliers.
FMECA, Failure Mode Effects & Criticality Analysis: methodology intended to recognize and
evaluate the potential failure of a product / process and its effects, and to identify actions which could
eliminate or reduce the chance of a potential failure to occur.
TOPSET: Comprehensive methodology used within Technip for incident investigation, in particular
when there has been a serious HSE or Quality incident. It makes use of a Root Cause Analysis (RCA)
software.
Technip Supplier Database: Database supported in EPC-Business, which consolidates in a single
location the procurement related information on Technip Suppliers.
Master Suppliers Lists: Reference Suppliers lists, maintained by the CFM per commodity. They are
available from the Technip Supplier Database and are to be considered for preparation of Project /
Proposal bidders lists.
CFM: Commodity Family Manager, responsible for a Commodity within the Technip Group Global
Procurement Organization (GPO).
Higher Risk Country: Market that Technip intends to develop (e.g. China, India, Russia, Far East
countries, etc) and for which there are more uncertainties than in countries with long term experience
of Oil & Gas standards.
Sustainable Development (SD) is a scheme that aims at developing the business without
compromising the ability of future generations to meet their needs. A wider concept is that of
Corporate Social Responsibility (CSR) which promotes a) proactive integration of social and
environmental concerns in business operations and b) interaction on a voluntary basis with
stakeholders (populations, clients, workers, etc).

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5. DEVELOPMENT OF THE PROCEDURE

5.1 Process Overview

The following Table highlights the different elements that have an impact on the conduct and scope of
Supplier Audits and Surveys:
Table 1: Overview of Main Control Points in the Supply Chain

Pre-Qualification Project Qualification Performance Analysis

Supplier Pre-Qualification
Questionnaire
Pre-Qualification Survey: Project Qualification Audit:
- FMECA type - Risks / areas of concern
- Technical type - Full audit
Project Compliance
- P.O. Kick-Off Meeting
- Engineering Review
- PIM, Pre-Inspection Meeting
Inspection Review
(QC driven, mostly based on
compliance to ITP/QCP)
Project Quality Audit (often
ISO 9001 Audit
with Client)

Project HSE Audit (often with

HSE Audit
Client)

Project Feedback

Feedback Report & Project

Rating

CFM Review & Group Rating

Investigations subsequent to
Re-Qualification Audit for R1
Quality Alert or major HSE
rated Suppliers
Incident (using TOPSET)

Scope of this procedure covers shaded areas in Table above. Emphasis should be placed on technical
and operational aspects (light / green shading) rather than on extensive ISO 9001 type audits (dark /
pink shading).

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The following Table, abstract from GOPS 21004, is a reminder of the mandatory requirements to be
applied against the Criticality Rating of a supply and which are further detailed in this Guideline:
Table 2: GOPS 21004 Requirements for Audits & Surveys

Criticality Rating of good or service to be supplied

Activity to be performed for Not Critical Moderate Significant High
Qualification D C B A
Review Supplier pre-qualification data
X X X X
(Section 5.2)
Validate bidder Proposal compliance with
X X X X
ITB
Perform Survey / Audit focusing on risks
Project
and areas of concern, if identified (Section X X
decision
5.3)
Perform Survey / Audit based on Project
X
Qualification criteria (Section 5.3) decision

5.2 Supplier Pre-Qualification Questionnaires:

Pre-qualification of a new Supplier will be started by completing Questionnaire Ref GTDS 21007-1.
In the case of a Criticality “A-High” or “B-Significant” material or equipment, it is recommended to
use this Questionnaire as the basis for a Sourcing Visit by a local Technip procurement representative,
in particular to assess / confirm what Material Codes the Supplier is likely to become qualified for.
Alternatively, this can be done by way of visit from the Supplier to Technip offices.
This first phase aims at establishing a certain level of confidence and is fairly informal. Supplier Pre-
Qualification Questionnaire should be updated if necessary prior to being loaded in the Technip
Supplier Database.
When it has been established that a Supplier has the potential to become qualified, the Safety and
Sustainable Development aspects should be completed immediately (Refer to GTDS 21007-9 and
21007-10).
These Questionnaires and associated documentation should also be reviewed prior to conducting a
Pre-Qualification Survey or a Qualification Audit.

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5.3 Decision Tree for Surveys & Audits

Depending on the level of risk, there are 3 levels of Surveys and Audits. In all cases, there must be a
formal decision at Project level to qualify a Supplier.

Supply with
Criticality Rating A,
B or C
GL 20009

Criticality A or B Manageability Other cases as

commodity in High Rating is poor per Table 2
Risk Country (1) (Note 2) (Note 3)

Yes Yes

Pre-Qualification Project Qualification Pre-Qualification

Survey - FMECA Audit Survey - Technical

GL 10202 GTDS 21007-5

Qualification Qualification Qualification

by Project by Project by Project

GTDS 21007-4 GTDS 21007-4 GTDS 21007-4

- Note 1: For Criticality A or B material or equipment in higher risk countries, a Pre-Qualification

Survey using the FMECA methodology should be engaged (Refer to section 5.4.1 below).
Estimated duration is 2 days at site to which must be added 2 days preparation and 1 day for
reporting.
- Note 2: Where Manageability Rating is poor (i.e. 3 or 4 as determined in GL 20009), a
Qualification Audit should be organised at Project level (Refer to section 5.5 below). Estimated
duration is 2 days plus 1 day for reporting. Typical cases of this happening as per GL 20009
would be: Lack of Supplier expertise with the product, work in excess of plant capacity, several
sub-suppliers of critical components.
- Note 3: A Technical Pre-Qualification Survey with issuance of a Survey Report should be
conducted in all other cases defined in Table 2 (Refer to section 5.4.2 below). Estimated duration
is 1 day.
In all cases, the conclusion of the Survey or Audit will include a clear recommendation:
- Supplier recommended,
- Supplier rejected (Purchase Order may not be placed),
- Supplier recommended subject to scope limitations or subject to action plan.
Format for Supplier Recommendation Sheet is proposed (Ref GTDS 21007-4).

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It will be Project’s decision to move a Pre-Qualified Supplier to Qualified status by ensuring that
action points have been adequately addressed. As per GOPS 21004, Purchase Orders can only be
placed to Qualified Suppliers.

5.4 Supplier Pre-Qualification Surveys

As indicated in section 5.1, two types of Pre-qualification Surveys can be conducted at Group or
Project level: FMECA and Technical.

5.4.1 Supplier FMECA Pre-Qualification Survey:

FMECA is a straightforward methodology of technical risk assessment and prevention which will
allow any Specialist of a given commodity to:
- Identify potential risks of not meeting key product specifications or related key process
parameters,
- Agree action plans with the Supplier that will allow reducing the Severity of the effect (S), then
reducing the risk of Occurrence of the fault (O) and finally improving its mode of Detection (D).
The following must be achieved after the FMECA concerning the Criticality Level (C) and the
Severity Level (S):
(C) = (S) x (O) x (D) < 100 after mitigation
S < 10 after mitigation (when possible by design)
There are three main benefits from this approach:
- It provides confidence in a Supplier’s capability to meet technical requirements and is indicative
of Supplier’s willingness and reactivity.
- It helps Suppliers located in higher risk countries to develop their potential to meet Oil & Gas
standards (Sustainable Development aspect).
- It positively identifies necessary areas of improvement and prompts for Supplier commitment in
the eventuality of a Purchase Order award.
An FMECA survey needs to be conducted by a Specialist (preferably familiar with the type of
production facilities) with the assistance of someone familiar with the methodology (this can be the
same person) and a Technip local representative. The local representative will help on aspects related
to the local culture and language and can follow up at site level afterward.
An FMECA survey requires upfront preparation work:
- Preparation of the FMECA presentation (GTDS 21007-2) to be used at the entry and exit meetings
at Supplier’s facilities.
- The FMECA preparation template (GTDS 21007-3) needs to be completed with the key product
characteristics and key process characteristics for each step of the production process.
- These must then be used to prepare the FMECA spreadsheet (GTDS 10202-1) which is in effect
the check-list to be completed during the Survey.
It is important to note that the FMECA and the final report remain the property of Technip and are not
to be distributed to the Supplier. However the support presentation with the agreed conclusions and
action plan must be handed out to the Supplier after the exit meeting. Upon finalisation of a Purchase
Order, these action points should be made contractual and Project needs to follow-up on action plan
implementation.
Clearly, the FMECA preparation work can be reused from one product to a similar one.

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Also, in case a problem has occurred during Purchase Order execution, FMECA can be used to help
identify the root cause of the problem (i.e. was risk not identified or under evaluated?), which can then
benefit future users of the methodology.
Note: For FMECA training, refer to GL 10202.

5.4.2 Supplier Technical Pre-Qualification Survey:

A Technical Survey is usually done by a specialist familiar with the manufacturing process.
Prior to such Survey taking place, it is important that the Pre-qualification Questionnaire (GTDS
21007-1) be sent to the Supplier and responses obtained. This will allow focusing discussions on
various aspects of the requirements such as capabilities, resources, planning, finance, schedule,
certifications, organisation, delivery, control of sub-suppliers, etc.
The Survey will be conducted to satisfy the following steps as a minimum:
- Opening meeting during which the completed questionnaire should be reviewed and assessed.
- An overview of how the Supplier handles Quality processes to satisfy the requirements.
- Technical discussions with key personnel on the requirements and how they can be met.
- Tour of the facilities with random samples to validate that controls are in place.
- Safety rating using the GTDS 21007-9, Supplier Safety Check-list.
The Survey Report should contain the following as a minimum:
- Scope of supply under consideration,
- Historical background,
- Recommendations and limitations for the type of material that can be procured there,
- Areas of concern.
Survey Reports will vary in size, but there is no need to be too descriptive when the Supplier clearly
could not demonstrate their capability. There should be more information on areas where the Supplier
will need to improve in the eventuality of a Purchase Order.
Where valuable information could not be provided during the Technical Survey, clear instructions will
be given to the Supplier as to what is requested.
The Survey Report is an internal Technip view and it is not the intention to provide a copy to the
Supplier. However feedback on the list of observations for improvement and the list of outstanding
information will be given to the Supplier at the conclusion of the visit.

5.5 Supplier Qualification Audits (Project Level)

The base scope for Supplier Qualification Audits normally covers Quality and Technical aspects
(Engineering and Process related) but within Technip it is policy that Safety and Sustainable
Development (SD) will also be included. The extent to which Safety and SD are to be covered during
these audits is explained in the following sections.
Each Project should designate the functions that need to be included in the audit teams:
- As a minimum, the audit should be conducted by the Project Quality Engineer / Manager (with
possible delegation for HSE and SD matters),
- For the more technical equipment or material, there should be a representative from the
Engineering function (typically the Requisition Engineer),

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- For the larger and more complex Purchase Orders, the team should also include a representative
from the Procurement function (typically the Buyer).
As described in GOPS 21004, the scope of such an audit may be limited to the identified risks and
areas of concern (such as may have been identified during Pre-Qualification Surveys) or may cover all
of the qualification criteria.
In order that a common methodology can be applied throughout all Operating Centres of the Group, a
set of Supplier Audit Preparation Guidance Notes (GTDS 21007-5) has been prepared and should be
discussed amongst the audit team as part of their preparation work.
There are several rules to follow in the conduct of an audit:
- An Audit Agenda (GTDS 21007-6) should be sent ahead of time and acknowledged by the
Supplier with participants to the audit clearly identified.
- An Opening Meeting should be conducted to ensure all parties are aligned. An Audit Attendance
Sheet (GTDS 21007-7) should be completed throughout the audit.
- In a relatively short time, a good overview of how the Supplier handles their business and how
they address HSE and Quality should be obtained.
- Supplier’s work process should then be audited in detail with sample checks to validate that what
is being explained is effectively being implemented. This involves a tour of the facilities.
- Audit team should convene at the end of day 1 to compare their notes and at the end of day 2 to
identify and classify audit findings.
- Findings should be presented during the Close-out Meeting and findings agreed then. Ideally the
list of findings can be left with the Supplier at the end of the audit. In all cases, it should be sent
within 3 days asking for confirmation dates for the actions and their completion dates.
Audit Reports (GTDS 21007-8) are to be concise with actions clearly listed for ease of follow-up.
Actions may be assigned to the Supplier or to Technip. Decision to send the full report to the Supplier
will be done on a case by case basis.

5.6 Inspection Reviews & Project Audits

After a Supplier has been qualified and selected, 3 tools are regularly used to verify that systems are
effectively implemented:
- Inspection Reviews,
- Quality Audits,
- HSE Audits.
Inspection Reviews conducted by the Lead Inspector on a Project aim at ensuring that the overall QC
system at Supplier’s and at key sub-suppliers’ facilities is well implemented. As per GOPS 21005,
Inspection Reviews are mandatory for Inspection levels 1 and 2 Purchase Orders.
The following recommendations should be implemented to minimise multiplication of verification
activities while providing confidence that Suppliers’ work is carried out in accordance with specified
requirements and to the Clients’ satisfaction:
- At start of the Project, Equipment and Material criticality should be assessed based on the
Equipment List to determine Equipment and Material that will be subjected to Inspection
Reviews.
- This list should be formalized and made available to the Project HSE and Quality Engineers /
Managers who should use this information in preparing the Project HSE and Quality Review &
Audit schedules, taking account of contractual requirements.

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- Minutes of the Inspection Reviews should be made available to HSE and Quality on the Project.
Inasmuch as possible, HSE and Quality should participate in these Inspection Reviews, if
necessary, rather than organise audits separately.
- Project Audits (HSE or Quality) during Purchase Order execution would normally only be
conducted where areas of concern have been raised during the Inspection Reviews.

5.7 Safety in Audits & Surveys

There are 3 principle reasons for assessing how Suppliers deal with Safety matters:
- It is important that the facilities where Technip personnel will be working either as residents or
during inspections be a safe place to work.
- Good Safety practices and attitudes are generally an indication of a company well managed
capable to deliver quality products.
- It is also a help to companies in moving towards Oil & Gas standards and improving their Social
Responsibility practices.
Safety should be looked at right from the first Survey or Audit. To this effect, a Supplier Safety
Check-list (GTDS 21007-9) has been developed. The objective is not to run through this check-list
during each visit but to have on record a recent assessment of the Safety situation at a given facility
and to monitor Safety improvements.
Should any “out of the ordinary” Safety matters be raised during any subsequent visit or audit, the
Safety Check-list should be used to report such.
In those cases where Safety is perceived as a real area of concern, Supplier should either not be
qualified or - if Supplier’s commitment can be obtained - a specific Safety audit should be conducted
with the objective of formalising an action plan that will give reasonable confidence.
Technip will not compromise where there are major deviations from basic Safety matters not
compatible with the Technip HSE Policy and Charter.

5.8 Sustainable Development (SD) in Audits & Surveys

Sustainable Development, although it has been developed in the Technip Social Charter since 2004,
has taken on a significant dimension more recently with the policy of expansion to markets under
development. There are several aspects of SD that need to be considered:
- Social Responsibility including compliance with local labour laws, in particular for sub-contracted
labour,
- Health & Hygiene,
- Environmental matters including their impact on the Community.
There are 3 main reasons for assessing how Suppliers deal with SD:
- Respect of Technip’s Social, Environment and Health & Safety Charters,
- Preservation of the image and reputation of Technip towards the public and towards the immediate
community,
- Technip’s belief that Suppliers with good SD practices will attract the better workers, provide
them with the necessary training and develop incentives schemes so that in the end there will be a
more reliable quality and better respect of schedules.
Different countries will have different standards and different practices on the subject.
Recommendation is clearly that of benchmarking Suppliers within a given country and to use this
information as leverage to bring Suppliers up to a minimum acceptable country standard.

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SD should be considered right from the initial contacts, and be introduced as a mandatory element in
view of a fruitful partnership. To this effect, a Supplier SD Check-list (GTDS 21007-10) has been
developed as a guide.
Where Suppliers have undergone a “Code of Conduct” type audit through a national scheme, details
should be obtained of the scope, and spot checks should be carried out in accordance with Check-list.
Where Suppliers are to manage significant aspects of Technip Projects, they will have an effective
management system in place and will be risk assessed against environmental criteria.
Any possibility to share SD data with other Companies or with Clients should also be investigated.

5.9 Availability and Sharing of Information

All documentation, whether reports or minutes of meetings, that relates to Surveys, Audits or
Inspection Reviews should be logged in the Technip Supplier Database.
It is reminded that these reports are classified as “Confidential” and cannot be released to Clients
without the prior consent of the Region that issued the report in the first place. Rather, it is
recommended to only give the Supplier Recommendation Sheet GTDS 21007-4.

6. ACCESS TO DATABASE
This GL is available in PDF format in the “Procurement” section of TPnet/Group site http://tpnet-
group.tpnet.intra/proceduresandstandards

7. APPLICATION FORMS AND TEMPLATES

GTDS 21007-1: Supplier Pre-qualification Questionnaire
GTDS 21007-2: Supplier FMECA Pre-qualification Survey Overview (Typical
GTDS 21007-3: FMECA Preparation Template (Typical examples)
GTDS 21007-4: Supplier Recommendation Sheet
GTDS 21007-5: Supplier Qualification Audit Preparation Guidance Notes
GTDS 21007-6: Supplier Audit Agenda Template
GTDS 21007-7: Audit Attendance Sheet Template
GTDS 21007-8: Audit Report Template
GTDS 21007-9: Supplier Safety Check-list
GTDS 21007-10: Supplier Sustainable Development Check-list
GTDS 10202-1: FMECA Spreadsheet

8. PROCESS OVERVIEW
See next page.

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