Advanced payment guarantee A bank guarantee issued by the seller to the buyer to enable the seller to recover money advanced to the seller in the form of stage payments, should the seller not deliver or finish the work.
Alternative Offer A offer which provides a solution with advantages in cost or performance compared to the solicited solution. An alternative solution will normally only be considered if the bidder also makes a bid that meets the solicited specification.
Applicable law The legal system and place where any dispute of the contract would be handled.
BDP Bio data proposal: Information on the qualifications and experience of key personnel on a project.
Bid bond A bank guarantee of a specified value issued by the seller to guarantee that the seller will not withdraw his bid from the tendering process, typically 2 % of quotation price.
Bid closing date Procedure for demonstrating fairness. The date that the quotation must be in the hands of the buyer. Quotations received after this date may be rejected without opening. This preserves the confidentiality of the bid procedure.
CN Contract negotiation: Bargaining activities entered into once the technical scope has been fully clarified.
Defects liability bond see warranty bond
Design competition Tendering system for high value capital projects where the companies taking part, propose their own solutions to the design brief. Once the competition winner is identified the contracts for the detailed design etc. are awarded.
Design Contractor The general contractor or design company employed to develop the basic design through to construction stage.
DPI Dye Penetrant Inspection - Test to check for faults in a weld fabrication.
EOI Expression of Interest: Written statement by a contractor / supplier to register a formal interest in tendering for a contract.
EPC EPC = Term used to describe the scope of a contractor. Commonly means Engineer, Procure and Construct.
EPIC EPIC = Term used to describe the scope of a contract. Commonly means Engineer, Procure, Install & Construct.
Escalation clause Agreed formula of changing the unit/contract price for contracts where deliveries continue over a long time period.
EXW Ex Works - Good are made available to the buyer unpacked, unloaded at the suppliers named premises. Risk transfers on notification of availability.
FAT Factory Acceptance Tests - Usually applied to packaged plant where the plant is tested against specified performance criteria before shipment to the construction site.
FCA Free Carrier Named Place - Term may be used for any mode of transport (road, rail, air, sea). Risk transfers on delivery to named point.
FOB Free On Board - Term correctly used for sea freight. Risk transfers as the goods pass over the ships rail at the named port of exit. With containerised transport FCA should be considered.
FP Financial Proposal: A separate document or section of the bid which is restricted to commercial issues.
FPSO Floating Production, Storage and Offloading vessel - Term for a type of oil "rig" used in the offshore oil & gas industry.
FTP Full technical proposal: A complete technical proposal with all documentation and supporting information identified in the RTB.
Hand over Process plant has been checked to confirm process quality and efficiency.
HART acronym = Highway Addressable Remote Transmitter
ICLOC Irrevocable Confirmed Letter Of Credit (see LOC) - This letter of credit has the additional security that the "confirming" bank itself undertakes to pay the LOC. In this case the buyer cannot withdraw or stop payment provided the correct documents and time periods are complied with. The confirmation is only as good as the bank that issues it. Banks in some parts of the world can be prevented from payment for political or other local reasons.
IMP-MPN IBM Multi Protocol Network - IBM provides a service to allow mobile users to access their home server through the IBM global network. The connect call is to a local number reducing the telephone charges.
Incoterms International chamber of commerce rules for interpretation of trade terms.
Investor The company or group that provide all or part of the project finance.
ISO International Standards Organisation
JV Joint Venture - A project has two or more investing companies.
Letter of conformity A written statement that the goods supplied conform to a specification or sample.
Letter of intent A letter of intent is not a contract, it is a statement of intent to place a contract at some future date. No work should be performed unless the letter of intent specifically approves that work should start.
Lien Term used in T+C's - Refers to the transfer of ownership of the goods. Contractors want to ensure that the goods they are buying do not have a mortgage or similar restriction on their transfer.
Liquidated Damages Term used in T+C's - Where parties agree in advance the cash value of the damages for specific breach of contract. Usually late delivery.
LOC Letter Of Credit - This is a written undertaking by a bank on behalf of a buyer to pay a specified sum of money, in a specified time, provided the seller presents documents in accordance with the details of the letter of credit. This type of payment provides no guarantee of payment, the letter of credit can be withdrawn by the buyer or the funds not transferred when due.  See also CLOC, ICLOC
LOI Letter of invitation: Written statement from a buyer to a seller to determine the suppliers interest in bidding for a contract.
Management contractor Contractor or consultant employed by the investor to prepare the specifications for the general contractor to tender against and assist in bid evaluation. Management contractor is usually retained to ensure that the general contractor meets the quality specification identified in the tender documents.
Material traceability Documentation provided by the supplier to prove that the goods are manufactured from materials (metals) of the correct specification. There are different levels of severity, the least of which is a "letter of conformity" issued by the seller.
Mill traceability A level of material traceability where the seller must supply documents issued by the foundry which detail the chemical analysis and material properties of the raw material. The documents must be cross referenced with the serial numbers of the finished goods.
NDT Non Destructive Test - General (technical) term to identify that the goods supplied should be subjected to individual or random tests. E.g. Pressure, x-ray, dye penetrant.
OEM Original Equipment Manufacturer - These are typically suppliers of electrical/mechanical packages e.g. dosing pumps, compressors, separators, refrigerators, evaporators.
PAMI Positive Alloy Material Inspection (technical term) - Usually used on contracts where stainless steel is required. It is an additional material test to check that the correct material grade is used. Takes place before and after production/assembly of the goods supplied.
Performance bond A bank guarantee of a specified value issued by the seller to guarantee that the seller will honour his contractual obligations. The buyer has the freedom to demand payment without the seller's permission.
Plant builder In large industrial projects there are many modules or services that are supplied as a complete plant. Examples of these are turbine generators, air separation plant, reverse osmosis unit, effluent treatment plant. Very often they are subcontractors managed by the architect or directly by the investor.
Purchasing Contractor The contractor is responsible for the purchasing activity only.
QP Quality Plan - Document detailing how a supplier assures the quality of production.
Retention Money held back by the buyer as a provision against defects appearing after the goods have been accepted but before the warranty period has expired.
RFQ Request for quotation
RTB Request to bid
Sealed bid Procedure for handling bids/quotations to demonstrate fairness. Normally the commercial and technical offers are separate documents sealed in their own packaging. Bids are opened in a special meeting where the bid values are recorded and observations minuted.
SDRI Supplier Document Register Index - A list of design/manufacturing documents in the RFQ that the buyer requires to be supplied if an order is placed. Same as VDRL.
SL Short List: A list of pre-qualified suppliers who will receive an RTB derived from various sources.
STP Simplified Technical proposal: in some situations a full quotation is not required, but the specific points identified in the RTB should be covered.
T+C Terms and Conditions
TCP/IP Transfer Communication Protocol/Internet Protocol
TP Technical proposal: See FTP.
Validity Number of days/ weeks/months that a bid is open to acceptance by the buyer. There are legal rules over the ability of a seller to withdraw or change his bid once made.
Variation This is a change to the scope of supply identified in the contract in quantity, material or time.
VDRL Vendor Data Requirement List - A list of design/manufacturing documents in the RFQ that the buyer requires to be supplied if an order is placed. Same as SDRI.
VDSL Vendor Data Supply List - A list of design/manufacturing documents in the bid/quotation that the seller offers to supply if an order is placed.
Warranty bond Usually issued in place of retention. A bank guarantee of a specified value issued by the seller to the buyer. Allows the buyer to claim payment from the sellers bank if the supplied equipment fails during the contracted warranty period.
Witness inspection A procedure where the buyer or buyers representative attends at the sellers works to witness some specific test activity, e.g. calibration, packing... This has the effect of disrupting the production process and tying up manufacturing resources and should be carefully considered.
WPQR Weld Procedure Qualification Record - An independent evaluation of the work procedure in welding two materials together. It is specific to the material type, thickness and orientation of the welding process.
WQR Welder Qualification Record - A certificate of approval that a named welder can perform a given weld procedure.
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