CONTRACT NO.

6600027129

RTIP IN KINGDOM

LSTK CONTRACT SCHEDULE Q QUALITY REQUIREMENTS

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RTIP LSTK IK CONTRACT NO. 6600027129

QUALITY REQUIREMENTS TABLE OF CONTENTS

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General ............................................................................................................... 1 Quality Management System Requirements ..................................................... 2 Documentation Requirements ............................................................................ 2 Management Responsibility ............................................................................... 3 Resource Management ...................................................................................... 3 Project Execution/Process Realization .............................................................. 5 Measurement, Analysis and Improvement ......................................................... 6 Contractor and Subcontractor Quality Personnel Qualification Requirements Company Standards and Procedures with Applicable Quality Requirements Quality Requirements for Contractor Materials and Equipment Quality Requirements for the Construction Phase Summary of Quality Management System Deliverables Project Specific Quality Requirements

ATTACHMENT I ATTACHMENT II ATTACHMENT III ATTACHMENT IV ATTACHMENT V ATTACHMENT VI

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1. 1.1 1.2

GENERAL This Schedule Q describes Companys minimum requirements for Contractors Quality Management System (QMS). Contractor will be fully responsible for the quality of the Work. Contractor must inspect, test and accept all parts of the Work, including all Work performed by Subcontractors and Vendors, to ensure the Work complies with all applicable drawings, specifications and standards. Company will be entitled to have the Company Representative or a nominee present at any time at all Work Sites where Contractor or its Subcontractors and Vendors are engaged in the performance of the Work, to review all aspects of Contractor's quality activities and to witness whatever inspection and testing is required by the Contract. Company retains the right to conduct whatever additional tests or inspections it deems necessary to ensure that all materials and equipment meet the requirements of the Contract and the applicable Purchase Orders. Contractor must not refuse Company or its nominee access to technical or other data which Contractor considers proprietary or confidential, and which is reasonably required to inspect Contractor's performance of the Work. Company retains the right to conduct additional tests or inspections as it deems necessary to ensure all Work conforms to the Contract. Company will complete its review of Contractors quality documents (e.g., Quality Plan, procedures, Inspection & Test Plans, etc.) and Contractor Personnel qualifications within thirty (30) days from initial submission of such quality documents and Contractor Personnel qualifications. Following such review, Company must Approve, provisionally Approve or reject with comments the submitted quality documents and/or Contractor Personnel qualifications. Contractor must not commence any Work related to engineering, procurement or construction of the Facilities prior to obtaining Approval of the Quality Plan in accordance with paragraph 3.1 of this Schedule Q. For any inspection or any test required to be witnessed by Company and/or required by the applicable Laws of the Kingdom of Saudi Arabia, Contractor must provide notice of such inspection or test as specified in the Approved ITPs to enable the Company Representative or delegate to attend. If any part of the Work or Facilities is closed or covered without Approval before the required inspection or witnessing has been performed, at Companys request Contractor must open or uncover the Work or Facilities for inspection or witnessing and re-close or recover at Contractors expense. If any inspection or test directed or performed by Company, or by another party at the direction of Company, reveals any defect in any Contractor Materials or Equipment or in the Work, Contractor shall bear

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the cost of such inspection and testing and must promptly correct such defect at Contractor's expense. 1.8 If Contractor does not adhere to the quality requirements of this Schedule Q, Company may, upon providing fourteen (14) days advance notification to Contractor, supply sufficient inspection and testing services to ensure the Work is being performed as required by the Contract. Contractor shall bear the cost of such inspection and testing. QUALITY MANAGEMENT SYSTEM REQUIREMENTS Contractor must implement a Project-specific QMS in compliance with this Schedule Q and based on the latest version of ISO 9001 (Quality Management Systems - Requirements). Definitions contained in the latest version of ISO 9000 (Quality Management Systems Fundamentals and Vocabulary) will apply to this Schedule Q. In case of conflict between ISO 9001 and this Schedule Q, the requirements of this Schedule Q shall take precedence, unless otherwise Approved. 3. 3.1 DOCUMENTATION REQUIREMENTS Contractor must prepare a Project-specific Quality Plan in accordance with this Schedule Q and the latest version of ISO 10005 (Quality Management Systems - Guidelines for Quality Plans) covering, as applicable, engineering, procurement, construction and Precommissioning activities and submit it to the Company for review and Approval within thirty (30) days from the Effective Date. Contractor must organize, execute and control all Work in accordance with the Quality Plan, ITPs and specified procedures. The Quality Plan must ensure Contractor processes, including those of Subcontractors, will be effective and the Work will be completed in strict compliance with all provisions of the Contract and the applicable Purchase Orders. Contractor must prepare ITPs and supporting checklists in accordance with Attachment IV to this Schedule Q and must not commence associated Work prior to Approval of the applicable ITPs. Contractor must submit Vendors ITPs in accordance with Attachment III to this Schedule Q. Pending Approval of the ITPs, Contractor must not permit fabrication to begin on any item required to have ITPs. Contractor must modify its Quality Plans and ITPs to reflect any changes identified by Contractor or Company. Contractor must incorporate any changes and resubmit the revised Quality Plans or ITPs for Approval within seven (7) days from identification of the changes. Contractor shall make the latest revision of Contractors quality manual, applicable Quality Plans and all referenced documentation available for Company use at Contractor's Work Site(s). Reference documents include all those contained in drawings, specifications and procedures for the

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inspection of equipment and materials to be fabricated or constructed at the applicable Work Site. 3.7 Contractor must identify and maintain quality records to demonstrate specified quality requirements are implemented and achieved. Records must support all activities related to the QMS to verify conformance to the quality requirements. MANAGEMENT RESPONSIBILITY 4.1 Contractor's top management shall conduct management reviews of the Project-specific QMS to ensure it is suitable, adequate and effective, as indicated in ISO 9001 (Quality Management Systems Requirements). The schedule for the management reviews must be provided to the Company Representative for review. Within fourteen (14) days from the management reviews described in paragraph 4.1 above, Contractor must advise the Company Representative in writing of the results and recommended actions arising from the reviews. Contractor must incorporate any changes to the QMS resulting from the reviews, with the Approval of the Company Representative, into the Quality Plans as necessary. RESOURCE MANAGEMENT 5.1 5.2 Contractor must provide resources to implement the QMS as set forth in the Contract. Within seven (7) days from the Effective Date, Contractor must designate the Quality Assurance (QA) Manager, who shall be assigned to the Work through to Work completion. At least thirty (30) days prior to the start of fabrication, Contractor must designate the Construction Quality Control (QC) Manager, who shall be assigned to the Work through to Work completion. Within thirty (30) days from the Effective Date, Contractor must designate the Procurement QC Supervisor, who shall be assigned to the Work through to Work completion of all procurement activities. Contractor, Subcontractor and third party agency quality personnel assigned to the Work must meet the minimum qualification requirements of Attachment I to this Schedule Q and must be technically competent to perform their duties. Contractor shall provide to Company resums and all associated certifications of all Contractor, Subcontractor and third party agency quality personnel for review and Approval prior to each individual starting work on the Project. Company shall have the right to interview and/or test such personnel and to reject proposed candidates if they do not comply with the

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requirements in Attachment I to this Schedule Q or if Company has had prior poor experience with such candidates. 5.7 If Work includes welding and non-destructive testing (NDT) and exceeds two thousand (2000) groove/butt weld joints, Contractor must designate an NDT coordinator a minimum of thirty (30) days prior to the start of welding. Contractor may subcontract inspection services subject to Company Approval. Contractors quality personnel will be dedicated to perform and complete all quality functions as described in this Schedule Q. Contractors quality personnel shall have sufficient and well defined responsibilities, qualifications, authority, and organizational freedom to identify quality problems and areas of non-conformance and to initiate, recommend and substantiate corrective actions. During all phases of the Work, Contractors QC Managers/Supervisors must functionally report to the Contractor QA Manager. QA/QC Managers/Supervisors must not functionally or administratively report to the Construction Manager. Within sixty (60) days from the Effective Date, Contractor must submit to the Company Representative as part of the monthly Quality Management Report (see paragraph 7.5 below) a summary sorted by discipline of quality personnel forecast to be mobilized or demobilized within the next sixty (60) days. Such forecasts shall include information pertaining to Contractors and Subcontractors construction personnel loading/unloading, as applicable. Contractor must include and maintain current in its Quality Plans or as an attachment, its organization charts clearly showing assignments of personnel including: 5.12.1 all planned quality personnel, including Subcontractor personnel, for the Project in accordance with Attachment VI to this Schedule Q; reporting relationships from inspector to the level above Contractors Project Manager; internal and external lines of communication; interfaces between Contractor and its Subcontractors and Vendors, and between Contractor and Company; and Mobilization and de-mobilization dates for all planned quality personnel.

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Planned staffing levels must comply with Attachment VI to this Schedule Q. Any planned reduction from the required levels must be approved.

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5.14

Contractor shall make quality personnel changes required due to resignations, temporary assignments, vacations, or other reasons as necessary to maintain required quality coverage. Contractor must advise the Company Representative at least thirty (30) days in advance of scheduled absences or changes to personnel and quality coverage or within seventy-two (72) hours for unscheduled changes including illness and emergency leave. Contractor shall implement and maintain an ongoing program to introduce and familiarize all Contractor Personnel and Subcontractor personnel with the Project quality requirements for their area of responsibility.

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6. 6.1

PROJECT EXECUTION/PROCESS REALIZATION Engineering Phase Quality Activities 6.1.1 6.1.2 Contractor shall comply with the engineering requirements of the Quality Plan and scope of Work. phase

Contractor shall perform engineering reviews at appropriate stages during the engineering phase according to the Approved engineering execution plan. Contractor must maintain records of such Contractor engineering reviews in accordance with the Quality Plan, including solicitation, recording, tracking and resolution of all comments.

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Procurement Phase Quality Activities Contractor must comply with the procurement phase requirements of the Quality Plan and Attachment III to this Schedule Q.

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Construction Phase Quality Activities Contractor must comply with the construction phase requirements of the Quality Plan and Attachment IV to this Schedule Q.

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Pre-commissioning Phase Quality Activities 6.4.1 6.4.2 Contractor must comply with the Pre-commissioning phase requirements of the Quality Plan and Schedule B. Prior to completion of Work, Contractor shall, at Contractors own expense, perform the inspections required by Schedule B to complete Pre-commissioning activities and document and correct any non-conformances. Contractor must submit a copy of the inspection results and status of the correction of non-conformances to the Company Representative each week until acceptance of the outstanding items.

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7. 7.1

MEASUREMENT, ANALYSIS AND IMPROVEMENT Internal Assessments 7.1.1 Contractor must conduct internal quality assurance/quality control assessments for contracts or work phases with a duration of six (6) months or longer. This shall include assessments of Contractor's quality functions and obligations as described in the Contract, Quality Plans, and ISO 9001 (Quality Management Systems - Requirements). This shall also include scheduled QMS assessments for all Subcontractors and Vendors carrying out Work which is scheduled to exceed six (6) months in duration. Contractor must submit a quality assessment schedule to the Company Representative for review and approval within thirty (30) days from the Effective Date. As a minimum, full QMS assessments shall be carried out at fifteen percent (15%) and sixty percent (60%) of completion of the engineering, procurement, and construction phases. Contractors assessments may be rescheduled only with the Approval of the Company Representative and the revised schedule must be submitted to the Company Representative within seven (7) days of the Approved rescheduling. All assessments must be executed by quality system assessors (qualified in accordance with Attachment I to this Schedule Q) not directly responsible for the area being assessed, or by an Approved third party agency. Contractor shall initiate corrective actions, at the Contractors own expense, to prevent recurrence of nonconformities identified in each assessment. Contractor must verify implementation and effectiveness of any corrective actions before closing. Contractor must submit to the Company Representative a copy of each assessment report within fourteen (14) days of its completion. The Company Representative or nominee shall be invited to participate in all assessments. Assessment notifications and agendas must be submitted to the Company Representative fourteen (14) days in advance of the planned assessment. Company will be entitled to have the Company Representative or nominees schedule and conduct quality assessments of Contractors quality functions and obligations as outlined in this Schedule Q. Company shall communicate the quality assessment schedule to Contractor at least fourteen (14) days prior to the assessment.

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7.2

Monitoring and Measuring of Processes Contractor must continually monitor and measure Contractor and Subcontractor critical processes throughout the Work. The Quality Plan must include suitable measurement methods to evaluate the ability of the process to achieve planned results. As a minimum, Contractor must evaluate the processes shown in paragraph 2.1 of Attachment IV to this Schedule Q as appropriate, in accordance with the scope of Work in Schedule B.

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Control of Non-conformance and Corrective and Preventive Action 7.3.1 In the Quality Plan, Contractor shall address procedures to prevent inadvertent use of engineering documents, materials, parts, components, equipment or services not conforming to requirements of the Contract. The Quality Plan shall require the identification and recording of all non-conformances, corrective actions and preventive actions. Contractor shall be responsible for all Contractor Materials, Equipment and portions of the Work that do not conform to the requirements of the Contract and in such circumstances, shall ensure the processes and procedures prescribed in paragraphs 7.3.3 to 7.3.6 (inclusive) below are followed. Contractor shall establish and maintain controls to restrict further processing or installation of nonconforming or defective items, pending decisions on disposition. When practical, Contractor shall segregate all nonconforming Contractor Materials and Equipment to a clearly designated hold area. Contractor, Subcontractors, and/or Vendors must record all non-conformances to Contract requirements, Quality Plans, ITPs, and procedures. Contractor shall forward records of all non-conformances to Company within forty-eight (48) hours of issue. Contractor shall initiate corrective actions to prevent recurrence of non-conformances a maximum of fourteen (14) days from the issue date of the non-conformance. Contractor shall provide the Company Representative with an explanation for non-conformances that will require more than fourteen (14) days to resolve. Contractor shall maintain a summary of the status of non-conformances and include this summary in the monthly Quality Management Report as indicated in paragraph 7.5 below. Contractor shall respond in writing, including proposed corrective action, to all non-conformances issued by Company within three (3) Business Days of receiving notification of the non-

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RTIP LSTK IK CONTRACT NO. 6600027129 conformance. Contractor shall, at Contractors own expense, promptly rework or repair and re-inspect all non-conforming items in accordance with Approved procedures and notify the Company Representative for verification prior to closure that such rework/repair is satisfactory.

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Contractors procedures for preventive action must describe the requirements for evaluating the need for actions to prevent occurrence of potential non-conformances and for the implementation of applicable lessons learned from previous projects.

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Variances Contractor shall maintain a log detailing all variances from Company standards obtained during all phases of the Work, including those initiated by Company (during or prior to the start of Work) or Contractor. This log must indicate the status of the variance and include a brief description and details of the applicable Purchase Order and equipment or construction process.

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Analysis of Data Contractor shall prepare and submit within sixty (60) days from the Effective Date, a monthly Quality Management Report in a format acceptable to Company to demonstrate effective implementation of Contractor's QMS. The Quality Management Report must include the following items, as a minimum: 7.5.1 General Items: (a) summary of quality assessments completed (internal, Subcontractors and Vendors), in progress, and planned for the next month; status of corrective actions from non-conformance reports, assessments and management reviews; quality personnel summary/forecast by discipline as specified in paragraph 5.11 above; and Status of engineering variances requested.

(b) (c) (d)

7.5.2 Engineering and Procurement Phase Items: (a) (b) listing of Vendor assessments performed with results and those planned for the next month; listing of pre-inspection meetings conducted and those planned for the next month;

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RTIP LSTK IK CONTRACT NO. 6600027129 (c) (d) listing of Vendor inspections performed with results and those planned for the next month; and Listing and disposition of all defective or rejected material or equipment.

7.5.3 Construction Phase Items: (a) listing and disposition of all defective or rejected material or equipment received at Construction Site by Contractor and Subcontractors; and welding rejection rate reported in accordance with the Tracking and Reporting of Welding, NDT and Pressure Testing for Capital Projects A554-O-PRG-QA-GENPRO013 document, including the historical performance during the Project.

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7.5.4

Narrative Section for Process Improvement Activities: This section of the report shall describe Contractors and Subcontractors activities during the month to continually improve their processes, prevent potential problems, and increase efficiency, and include trend analysis for processes identified in paragraph 7.2 of this Schedule Q. End of Schedule Q

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