Evidence, not confidence: using inspection and test plans to accept supplier work

A supplier says the work is finished and sends an invoice. The customer is not sure the quality is right. A test was done but nobody from the customer saw it. The measuring instrument used may or may not have been calibrated. A defect was mentioned on site but never written down. Now both parties rely on memory and opinion, and a simple payment becomes an argument.

This situation is common in fabrication, installation, equipment supply and construction, and it is avoidable. The problem is usually not that the supplier did poor work. It is that nobody decided in advance how compliance would be demonstrated. The work was specified, but the evidence was not.

This article explains how to design supplier performance so that it produces evidence as the work progresses, rather than reconstructing it after a dispute. It covers inspection and test plans, hold points and witness points, how to match the level of assurance to risk, how to connect evidence to payment and completion, and how a small business can apply these tools proportionately.

Key terms

A few terms are used throughout:

• An inspection and test plan (ITP) is a document that lists, for a piece of work, each inspection or test to be performed, what it checks, the acceptance criteria, who does it, and what record it produces.
• A hold point is a step at which work must stop until the customer, or someone it nominates, has inspected or accepted it. Work cannot proceed past a hold point without release.
• A witness point is a step that the customer must be notified of and may attend, but work can proceed if the customer chooses not to attend after proper notice.
• A review point is where the customer reviews a document or record, such as material certificates or test results, rather than attending in person.
• Acceptance criteria define what result counts as a pass.
• Calibration is checking a measuring instrument against a known reference so its readings can be trusted.
• A non-conformance is a result or condition that does not meet requirements.

Assurance is an information design problem

Most specifications describe what must be delivered. Fewer describe how delivery will be proven. Designing that proof is an information task: deciding what evidence is needed, when it must be produced, who must see it and what decisions depend on it. Done well, it removes most arguments about completion before they start.

Common misreadings

• Experienced suppliers do not need formal evidence. Experience reduces some risks. It does not create a record that can support payment, warranty or a later claim.
• Quality is the supplier’s business. The supplier manages its own quality system, but where payment, completion or safety depend on performance, the customer needs defined visibility.
• More checklists mean more assurance. Hundreds of ticked boxes do not create confidence if the critical risks are not being tested.
• Everything should be a hold point. Too many hold points stall work and can blur responsibility. The skill is choosing where to stop, where to watch and where supplier self-checking is enough.

Match assurance to risk

Not every activity needs the same scrutiny. Decide the level of assurance using factors such as:

• Consequence of failure, including safety.
• Likelihood of a defect, considering the process and the supplier’s history.
• Detectability later: will the work be hidden, sealed, painted, buried or installed out of reach?
• Cost of rework if a problem is found later.
• Importance to commissioning or to other work.
• Regulatory requirements, which may require specific inspections.

A practical guide:

A helpful question for each step is: what evidence will we wish we had if this fails later?

Design evidence around how things fail

The most useful evidence is aligned with how the deliverable could fail. If a hidden weld could later crack, inspection before it is covered is critical. If correct bolt torque determines integrity, calibrated torque tools and recorded values matter more than a general visual check. If software settings decide how equipment performs, the version and test records matter. Start with the failure modes, then design the inspections and records to address them.

Five elements for each significant deliverable

For each important piece of work, define:

1. Acceptance requirement: exactly what must be true.
2. Evidence: which document, test, inspection or record proves it.
3. Witness level: supplier self-check, customer witness, independent third party or hold point.
4. Authority: who can accept the evidence on the customer’s behalf.
5. Commercial effect: whether acceptance triggers a payment, a milestone, the start of a warranty or another consequence.

Agreeing these before work starts makes payment and completion decisions straightforward.

What a simple ITP looks like

An ITP need not be complicated. A table is usually enough:

The supplier usually drafts the ITP. The customer reviews it, adds hold and witness points where risk justifies, and agrees it before work begins.

Calibration and test integrity

A test result is only as good as the instrument that produced it. Ask that measuring equipment used for acceptance tests, such as gauges, torque tools and meters, has current calibration, and that certificates are available. Record which instrument was used for each test. Where results matter a great deal, check that the test method and conditions match what was agreed.

Manage defects with a register

Record every non-conformance or defect in a register: what was found, where, when, who is responsible, what action was agreed and how it was verified as fixed. Do not close a defect on a supplier’s word alone. Closing it needs objective evidence: a re-inspection, a re-test or a photograph, depending on the risk. A defect discussed verbally and never recorded is easily forgotten by everyone except the person who later pays for it.

Connect evidence to payment and completion

Assurance has commercial weight when it is linked to money and milestones. Practical approaches:

• Link progress payments to evidence, such as a witnessed test or accepted inspection.
• Define completion as a list of evidence, not a feeling: tests passed, records delivered, defects closed or listed with agreed actions.
• Retain a portion of payment until documentation and outstanding defects are resolved, where the contract allows.
• Keep quality and commercial records consistent, so the payment team and the people inspecting work agree on what is complete.

Standard-form contracts used in Australia often include provisions about testing, access to inspect and dealing with defective work. Read your contract and take advice on how its terms apply. The practical tools in this article make those rights usable.

Keep records where they will be found

Evidence is only useful if it can be found when needed, which may be years later during a warranty claim, an insurance question, a regulator’s inspection or the planning of a modification. Store inspection and test records with the asset or project they relate to, not in a personal inbox. A simple folder structure per asset or project, holding the agreed ITP, certificates, test records, the defects register and handover documents, is usually enough for a small business. Name files consistently so they can be searched. Keep records for at least as long as the warranty and any legal or contractual retention period, and check with your adviser what applies. When the asset is modified later, add the new evidence to the same place, so the history stays complete.

Use evidence to choose suppliers next time

Records of defects, test results, response times and completion quality turn supplier reputation into evidence. A supplier described as “difficult but capable” can be judged more fairly when the records show actual defect rates and responsiveness. Over time, this helps you choose and reward the suppliers who perform.

A worked example

This is an illustration. A small brewery orders a new stainless steel fermentation tank and associated pipework from a fabricator. The tank will be insulated and clad after fabrication, so many welds will be hidden. Pressure equipment can be subject to specific design, registration and inspection requirements, so the brewery checks its obligations with the state work health and safety regulator and asks the fabricator how it will meet them.

The fabricator drafts an ITP. The brewery reviews it and adds:

• A review point for material certificates before fabrication starts.
• A witness point for weld inspection before insulation.
• A hold point for the pressure test in the factory, before cladding, using a gauge with current calibration.
• A review point for cleaning and surface treatment records.
• A witness point for the leak test and functional test after installation on site.

Payments are linked to evidence: 30% with the order, 40% after the witnessed factory pressure test, 20% after site installation and leak test, and 10% after 30 days of operation with all recorded defects closed and documentation delivered.

At the factory pressure test, a small leak appears at one weld. Because insulation has not yet been fitted, the fabricator repairs the weld in a few hours and the test is repeated and passed. Had the leak been found after cladding and installation, the tank would have needed draining, unclading and repair on site, with lost brewing time. The defect is recorded in the register with the repair and re-test, and the brewery has a clear record if questions arise later.

How this applies to a small Australian business

Small businesses buying fabricated items, equipment or installation work can apply these tools in proportion to the job:

• Ask suppliers for an ITP for significant work, and review it before work starts.
• Add hold points only where work will be hidden or failure is costly.
• Agree acceptance criteria in writing, including test methods.
• Ask for calibration evidence for instruments used in acceptance tests.
• Keep a simple defects register and close items only on evidence.
• Link payments to evidence where the contract allows.
• Check regulatory inspection requirements for regulated work, such as pressure equipment, electrical work or structural elements, with the relevant regulator or certifier.

The articles on planning the path from supplier to installation and buying for the whole life of equipment cover related parts of the purchase.

Signals worth watching

• Payment claims without supporting inspection or test records.
• Hold points bypassed under schedule pressure.
• Tests done with instruments of unknown calibration.
• Defects closed without verification.
• Test results kept outside the project records.
• Different views of completion status between quality and payment teams.
• Defects discovered in work already covered or hidden.

Common mistakes

• Specifying the work but not the evidence.
• Making everything a hold point, or none.
• Accepting test results without calibration evidence.
• Recording defects verbally.
• Paying on claims rather than evidence.
• Ignoring regulatory inspection requirements.
• Not using records to inform future supplier choices.

Frequently asked questions

Will suppliers object to ITPs and hold points? Good suppliers usually welcome clear acceptance criteria, because they reduce disputes and speed up payment. Agree the plan before work starts, and keep hold points to what risk justifies.

Do we need to attend every witness point? No. A witness point gives you the option. Decide based on risk and your capacity, but do attend the critical ones.

What if we lack the expertise to inspect? Engage an independent inspector for critical points, or rely on review of records with clear acceptance criteria. For regulated work, the relevant certifier or inspector will have defined roles.

Questions to ask

• What evidence proves each critical part of this work is complete and correct?
• Which steps will be hidden or hard to reach later?
• Where do we need a hold point, a witness point or only a record review?
• Are the instruments used for acceptance tests calibrated?
• How are defects recorded, and how are they verified as closed?
• Are payments and completion linked to evidence?
• Are we using supplier performance records to choose suppliers next time?

Bringing it together

Confidence is useful, but it is not evidence. Design supplier work so that it produces proof as it progresses: an inspection and test plan with clear acceptance criteria, hold and witness points where risk justifies them, calibrated instruments, a defects register closed on evidence, and payments and completion tied to that evidence. Match the level of assurance to consequence and detectability, and use the records to choose suppliers better next time. The question is not whether the supplier is trusted. It is whether you can show the required result was achieved.

Source: KEVOS notes. Examples and figures in this article are illustrations. This article is general information, not legal advice. Check contract terms and regulatory inspection requirements with an adviser or the relevant regulator.