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WORD
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MEANING
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Advanced
payment guarantee
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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.
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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. |
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Applicable law |
The legal system and place
where any dispute of the
contract would be handled.
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BDP |
Bio data proposal: Information
on the qualifications and
experience of key personnel
on a project. |
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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. |
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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. |
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CN |
Contract negotiation: Bargaining
activities entered into
once the technical scope
has been fully clarified.
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Defects liability bond |
see warranty bond |
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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. |
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Design Contractor |
The general contractor or
design company employed
to develop the basic design
through to construction
stage. |
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DPI |
Dye Penetrant Inspection
- Test to check for faults
in a weld fabrication. |
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EOI |
Expression of Interest:
Written statement by a contractor
/ supplier to register a
formal interest in tendering
for a contract. |
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EPC |
EPC = Term used to describe
the scope of a contractor.
Commonly means Engineer,
Procure and Construct. |
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EPIC |
EPIC = Term used to describe
the scope of a contract.
Commonly means Engineer,
Procure, Install & Construct.
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Escalation clause |
Agreed formula of changing
the unit/contract price
for contracts where deliveries
continue over a long time
period. |
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EXW |
Ex Works - Good are made
available to the buyer unpacked,
unloaded at the suppliers
named premises. Risk transfers
on notification of availability.
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FAT |
Factory Acceptance Tests
- Usually applied to packaged
plant where the plant is
tested against specified
performance criteria before
shipment to the construction
site. |
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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.
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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.
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FP |
Financial Proposal: A separate
document or section of the
bid which is restricted
to commercial issues. |
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FPSO |
Floating Production, Storage
and Offloading vessel -
Term for a type of oil "rig"
used in the offshore oil
& gas industry. |
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FTP |
Full technical proposal:
A complete technical proposal
with all documentation and
supporting information identified
in the RTB. |
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Hand over |
Process plant has been checked
to confirm process quality
and efficiency. |
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HART |
acronym = Highway Addressable
Remote Transmitter |
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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. |
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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. |
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Incoterms |
International chamber of
commerce rules for interpretation
of trade terms. |
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Investor |
The company or group that
provide all or part of the
project finance. |
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ISO |
International Standards
Organisation |
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JV |
Joint Venture - A project
has two or more investing
companies. |
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Letter of conformity |
A written statement that
the goods supplied conform
to a specification or sample.
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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. |
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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.
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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. |
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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
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LOI |
Letter of invitation: Written
statement from a buyer to
a seller to determine the
suppliers interest in bidding
for a contract. |
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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.
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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. |
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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. |
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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. |
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OEM |
Original Equipment Manufacturer
- These are typically suppliers
of electrical/mechanical
packages e.g. dosing pumps,
compressors, separators,
refrigerators, evaporators.
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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. |
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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.
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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. |
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Purchasing Contractor |
The contractor is responsible
for the purchasing activity
only. |
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QP |
Quality Plan - Document
detailing how a supplier
assures the quality of production.
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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. |
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RFQ |
Request for quotation |
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RTB |
Request to bid |
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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. |
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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. |
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SL |
Short List: A list of pre-qualified
suppliers who will receive
an RTB derived from various
sources. |
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STP |
Simplified Technical proposal:
in some situations a full
quotation is not required,
but the specific points
identified in the RTB should
be covered. |
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T+C |
Terms and Conditions |
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TCP/IP |
Transfer Communication Protocol/Internet
Protocol |
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TP |
Technical proposal: See
FTP. |
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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.
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Variation |
This is a change to the
scope of supply identified
in the contract in quantity,
material or time. |
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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. |
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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.
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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. |
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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. |
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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. |
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WQR |
Welder Qualification Record
- A certificate of approval
that a named welder can
perform a given weld procedure.
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