Third-Party Inspection Meaning

Modern third-party inspection alludes to independent inspection services provided by inspection agencies. Pittsburgh Mineral & Environmental Technologies (PMET) is one of these third-party inspection companies. This blog post explains TPI companies, TPI definitions, and TPI responsibilities. It supplies you with third-party independent inspection procedures for the different fix, rotary, electrical, and instrumental equipment.

The sellers and vendors are the first parties in purchasing and procurement projects. The second parties are purchasers or buyers.

First-party inspection refers to quality control activities done by equipment vendors or sellers.

Second-party inspection refers to inspection activities done by equipment buyers or purchasers.

The first party is the seller, and the second party is the buyer. When you say second-party inspection, a buyer does inspection and quality control activities. When you say first-party inspection, it means an inspection and quality check done by a vendor in its construction shop.

These quality controls and inspections are based on: 

• Manufacturers’ procedures
• Purchase orders
• Customer requirements
• International standards

Third-party inspection refers to independent inspection activities by a third-party inspection company. They are either hired by a buyer or seller.

These agencies must be impartial and independent in their:

• Inspection activities
• Reports
• Results based on these requirements

All interested companies such as:

• Traders
• Buyers
• Sellers
• Engineering companies
• Construction companies

The impartial and independent conditions are critical factors for third-party Inspection companies. In this direction, ISO 17020 does not allow these companies to participate in:

• Any procurement
• Purchasing
• Construction
• Installation
• Design activities

They must only provide third-party inspection services and not anything else.

Based on the ISO 17020, these inspection companies are category A inspection organizations. Based on this standard, two more inspection companies are not independent. 

A Category B inspection company is an inspection department in a large-scale company. They are involved in the: 

• Design
• Procurement
• Construction
• Installation
• Etc

In addition, this inspection department provides inspection services to its own company.

A Category B inspection company is a quality control department in an engineering or EPC company. This department assists the company in procurement and purchasing projects. They also inspect the equipment and materials purchased by their own company.

Suggest an EPC contract with an oil company to design, procure, and construct a desalting plant. Then the quality control department of this EPC company inspects the equipment and material that the EPC contractor for this desalting plant has ordered. So, this is what we name second-party inspection, and based on the ISO 17020 is a category B type inspection.

This inspection will not be enough for the end user or, in this example, an oil company. Therefore, the oil company will hire an independent inspection company. In other words, a Category A inspection company inspects the procured equipment and material by the EPC company. 

Sometimes, the end-user or “oil company in this example” ignores hiring an independent inspection company by itself but mandates that the EPC company hire an independent inspection agency in their approved list.

Different projects have different procedures for handling inspection activities in their procurement projects. For example, sometimes, the procured equipment is inspected by both parties. By EPC contractor quality control and by the end-user third-party inspection agency. In other words, equipment is inspected by Category A and Category B inspection companies.

Based on the ISO 17020 definition, there are also Category C inspection organizations. However, their inspection organizations are not too many. It refers to the inspection department of an engineering company that provides services to its procurement and purchasing projects and other engineering companies. Similar to the Category B inspection organizations, these companies cannot be independent. 

There are many scopes of work for Category A inspection agencies or, in other words, third-party inspection companies. One of them is third-party quality inspection, which refers to the quality part of work.  In this part, an inspection agency checks and makes sure that the quality of the commodity is the same as the purchase order specification.

Buyers and purchasers determine the scope of work. Some of them require only a pre-shipment inspection. Some others may mandate a more stringent scope. They might ask their third-party inspection company to witness necessary tests and examinations. These could include:

• Material certificate review
• Material identification
• Welding inspection
• NDE test review
• Dimensional control
• Hydro-static testing
• Mechanical running testing
• Performance testing
• Painting inspection
• Packing
• Marking and loading inspection

The scope of work for inspection and testing is defined through an inspection and test plan (ITP). You can check out one of our previous blogs to learn how to write an inspection test and plan. This is an essential document in purchasing and procurement projects. This document identifies the duty and task of each party regarding inspection during the manufacturing and construction process.

In a giant project, a Category A inspection company or organization must expedite inspection activities. The inspection agency must check to see if all inspections and tests are done. They must have satisfactory results before issuing inspection release notes. 

An inspection agency must expedite procurement work, such as reporting to the client about the percentage of manufacturing progress. These are not the tasks of the inspection agency; these must be done by an EPC contractor, expeditor engineer, or technician.

This checking must be done based on an approved inspection and test plan. The inspection agency can use the ITP as a checklist. This is to see if all reviews are completed and if their inspection visit reports are available.  

It is a best practice for an inspection release note to refer to the purchase order number and the inspection and test plan document number. You must state the quantity in the release note if the commodity will ship partially. 

It is the responsibility of the category A inspection organization to issue an inspection visit report after each visit to the manufacturer’s shop. The inspection date must notify the inspection agency seven working days in advance. It is the responsibility of the vendor to inform the inspector agency. The quality control team must check inspection and test plans frequently. When they see they have reached a specific stage of construction that needs an inspection, they must notify the inspector for its visit. 

The communication channel between the inspection agency, vendor, and client must be set up. This is typically done in a pre-inspection meeting or pre-production meeting. In this meeting conducted before the commencement of the project, all parties will attend the meetings. This is where they will discuss project coordination and communication. 

All parties are responsible for acting based on what is agreed upon and confirmed. The Minute of Meeting (MOM) will be based on coming actions.

As TPIs in fabrication, machine, assembly, coatings, etc., shops, it is your responsibility to carry out the inspections required by the customer or industrial standards. A TPI is to observe and report; at no time should you vary from the ITP unless a conflict in procedures arises. DO NOT tell a vendor what to do or how to operate during inspections. Being a TPI means verifying that all procedures were followed and that the outcome of those inspections was documented.  

If a failure or non-conformance is noted during your inspection, it is not your responsibility to solve the issue. However, the quality system that is in place should have steps on how to resolve the NCR with the client’s acceptance.

How PMET Can Help You!

Feel free to contact us today if you are interested in learning more about the third-party inspection services we offer. PMET can take away the headaches, and make sure your project goes smoothly, and find out more about our third-party services.