Issues with installation qualifications
Thread Content
I encountered an incident recently: in November 2008, the factory issued a tender for the renovation of the existing combustion system (switching from coal to natural gas, using a split-type system with proportional combustion). A particular company was chosen to carry out this work; the decision was based on the fact that this company had previously renovated similar systems for our company’s industry leader, boasting considerable experience in such tasks, and its bid was not too high. In January 2009, the renovation of the combustion system was completed and required inspection. (Since this renovation was part of a larger project, everything included in that larger project had to go through the supervision company.) At that time, the supervision company stated that this company did not have the necessary qualifications for installation; it merely sold natural gas burners. Several remedial measures were proposed: 1. Change the original renovation contract to a contract for the purchase of burners ； (One can imagine how difficult it is to renegotiate contracts with large companies.) 2. The construction contractor partners with a company that has the necessary installation qualifications, signs an additional subcontracting agreement, and pays 5%–8% in management fees to that partner company ； (The construction company believes that he is simply selling burners and providing corresponding after-sales service, so no installation qualifications are required; the main issue is their reluctance to pay for it.) 3. The inspection was carried out in this manner directly, and the supervision company issued a memorandum to our company stating that no installation qualifications were available, with those documents being destroyed after one year. (The supervisor passed the inspection and shirked responsibility as well). Gentlemen, let’s discuss how to handle this matter This post was last edited by laiqi on 2009-2-13 09:30]
Which expert can give some advice for reference?
It’s still more reliable to look for larger organizations
Here are some personal opinions on this: 1. Regarding the “modification of the combustion system,” I’m not sure whether the LZ’s “combustion system” refers to that of a boiler or a heating furnace If so, then generally no so-called \"installation qualification\" is required, that is, a qualification for installing boilers. The installation qualification for boilers focuses on the permission to install the boiler itself, and it does not impose strict requirements regarding the installation of its auxiliary components ； The split combustion system can only be considered an important component of a boiler. 2. The supervision company’s views on the installation qualifications require further discussion; if such qualifications are indeed necessary, relevant ** or industry regulations can likely be found ； In my opinion, this is a way for supervision companies to shirk responsibility when they are not sure about something and cannot find relevant regulations. 3. Regarding the issues related to the modification contract, there are indeed some problems, as the contractor is actually the supplier of the combustion system and cannot sign a construction contract for the project; installation and commissioning are only included as part of the sales contract. Because the tax rates for sales tax and business tax on construction work are different. For discussion!
The combustion system I am referring to is that of metal heating furnaces, such as reverberatory furnaces. The items supplied and installed include burners, solenoid valves, proportional valves, combustion controllers, temperature regulators, blowers in front of the furnace, as well as the corresponding air ducts and natural gas pipelines (with a natural gas pressure of 5000 Pa). The supervision company mainly said that he does not have the qualifications for installing mechanical and electrical equipment, considering that it could cause problems if anything goes wrong in the future. As for suppliers signing construction contracts, I think that’s also normal; it helps to avoid a lot of disputes between suppliers and installation firms, as well as prevent double counting of some minor components ； Of course, it’s best to specify the prices separately in the contract, and the invoices as well. For this combustion system renovation, the supplier is willing to provide a full VAT invoice (equipment invoice). During the current VAT reform, which entity would not be happy about it?
There is indeed a problem here: 1. The invoice issued for the settlement of the construction contract is an equipment invoice; I wonder how your finance department managed to approve it? The finance departments of state-owned enterprises (such as those in the Sinopec group) are extremely strict on this matter: invoices for project costs must be provided for construction contracts, while invoices for equipment (or spare parts) can be issued only in conjunction with purchase contracts. 2. The installation of the combustion system involves the setup of equipment such as front-mounted blowers, air ducts, and gas pipelines, as well as related piping; indeed, qualifications for installing mechanical and electrical equipment are required, and presumably corresponding qualifications for handling gas are also necessary. For reference!
Find a larger organization to be affiliated with; otherwise you will have to take responsibility
1. If the construction contract includes supply of equipment, I don’t think there’s any problem with providing invoices for those devices. Generally, it is the construction party that is reluctant to do so. Equipment invoices are VAT invoices at a rate of 17%, while project-related invoices have a rate of less than 7% (they are issued under local tax regulations based on the location where the work is carried out). With the current reforms to VAT, VAT invoices for fixed asset investments can also be used for deductions – so why not do it? If the contractor is unwilling to provide it, separate invoices should be issued: a VAT invoice for the equipment cost, and an invoice for the installation fees ； 2. Gas pipelines with a pressure of less than 0.1 MPa do not require any gas installation qualifications; the pressure of our company’s gas pipelines is only 5,000 Pa.