The acceptance chain: eight gates from the factory floor to close-out

Why one acceptance is not enough

Most first equipment contracts contain a single notion of acceptance, usually attached to delivery or to a test at the supplier's factory. That is one checkpoint across a journey with at least four distinct opportunities for things to go wrong: during manufacture, in transit, during installation, and during production.

A chain of gates fixes this without adding cost, because each gate is a test somebody was going to perform anyway — the only change is that it becomes named, dated, documented and (where it matters) tied to money. What follows is the standard sequence used on industrial projects, described for a buyer rather than for a project engineer.

The eight gates

Only gates 1 and 2 happen in China. Everything from gate 3 onwards happens on your floor, which is worth noticing: most of the acceptance chain sits in the part of the project a machine-only purchase does not cover.

The confusion that costs the most: MC is not acceptance

If you take one thing from this article, take this. Mechanical Completion certifies that the line was built correctly. Provisional Acceptance certifies that it produces correctly. They are weeks apart and they are not interchangeable.

The failure mode is simple and common: installation finishes, everything looks complete, someone produces a completion certificate, and the buyer signs it believing the project is done. What has actually been signed is that the erection work is finished — and if the contract tied payment or the warranty start to “completion” without saying which, a large part of the buyer's remaining leverage has just been handed over before a single saleable unit has been made.

Write both into the contract by name, define what each requires, and never let one document do both jobs. The wider set of clauses this belongs to is in the eleven clauses that decide a production line purchase.

The second most consequential date: when the warranty starts

The warranty normally starts at PAC, and where it does not, the difference is expensive. A twelve-month warranty starting at shipment can lose four to six months to freight, clearing, a site that was not ready and a slow installation — leaving cover that expires in the middle of ramp-up, which is precisely when early-life faults appear.

Three things to fix in writing: the start event (PAC, not shipment or delivery), what happens to the warranty if the project is delayed by something outside your control, and whether the clock pauses while the line is out of service for a warranty repair. The third is rarely asked for and frequently granted.

Evidence first, payment second

Gates are only as strong as what is attached to them. The discipline that makes the chain work is that each payment has a named evidence list, and the evidence is verified before the money moves — not a schedule of dates, and not a schedule of events the supplier controls alone.

The principle is worth stating plainly because it is what separates a schedule that protects you from one that merely describes the calendar: every instalment tied to a verifiable milestone, and the final payment tied to acceptance. How to structure that safely, and what each payment instrument actually protects, is in how to pay a Chinese supplier safely.

The ITP: the gate nobody asks for

Of the eight, the Inspection and Test Plan is the one most often absent from a first-time purchase, and it is the cheapest to add. It is a document agreed before manufacture that lists what will be inspected or tested during the build, by whom, against what standard, and what record results.

Two terms inside it carry the weight:

• A hold point is a step the builder may not pass until the inspector releases it. Pressure testing before a vessel is insulated, or a weld inspection before a seam is covered, belong here — anything that becomes impossible or expensive to verify later.
• A witness point is a step the inspector is notified of and may attend, but work proceeds either way.

The distinction decides whether a missed inspection stops the build or simply goes unobserved, and most buyers discover it by finding out which one they had. Without an ITP, “we will keep you informed” is the entire quality regime until FAT — by which point everything that was going to be hidden is hidden.

What the FAT can and cannot settle

FAT is the most familiar gate and the most over-trusted. It is run under the supplier's conditions: their power, their compressed air, their water, frequently their material, and with their best technicians standing beside the machine. That is genuinely useful — it proves the equipment is capable — and it is not a substitute for SAT.

Two things make a FAT worth what it costs. First, the protocol must be written and agreed before the build starts, because a protocol written afterwards is written around what the machine can already do. Second, it should run on your material where that is physically possible, including your worst realistic material rather than a selected sample. Our factory acceptance test checklist and FAT vs SAT cover the detail of each.

What SAT should actually measure

The performance test at SAT is where the contract's output commitment is either honoured or exposed. Three requirements separate a real test from a demonstration:

• Good, packed units at the end of the line — not machine throughput, and not units before the reject station. The gap between a machine rating and line output is normally 40–50%, for reasons set out in why a new line misses its rated output.
• Sustained — hours of continuous running, not a burst. Short tests measure the best minutes of a line, which is not what you bought.
• On your material and your utilities — including running through whatever your power situation actually is.

The punch list, and why FAC matters

Almost every project reaches PAC with outstanding items: a guard to be modified, a document not yet supplied, a minor leak. That is normal. What matters is that the punch list is written at PAC, with an owner and a due date against every item, and that something is still held against its closure.

That something is FAC. A project with no defined final acceptance has no defined end: the warranty quietly lapses, the retention quietly gets released or forgotten, and the open items become yours by default. Setting FAC as an explicit event — warranty expired, punch list closed, as-built documentation and training records delivered, retention released against it — costs one clause and closes the loop.

A buyer's minimum version

If the full chain is more process than your project can carry, the reduced set that still protects you is four gates and four documents:

• An agreed FAT protocol before the build starts, run on your material.
• A separate MC certificate, explicitly not acceptance, with the punch list attached.
• A SAT performance test measuring good packed units per hour, sustained, with PAC issued on passing and the warranty starting there.
• A defined FAC with retention released against it.

Four clauses. They cost nothing to write at contract stage and they are the difference between a project that ends and a project that trails off.

What CISH does in this part of the process

We write the chain into the contract at purchase — the ITP, the FAT protocol, the MC and PAC definitions, the SAT performance test method, the warranty start event and the FAC conditions — and we attach an evidence list to each payment point. On projects we deliver, our engineers witness the gates in China and on your floor and issue the reports. Where a buyer is running the purchase themselves, we will review a draft contract and payment schedule against this chain and tell you which gates are missing and which are defined loosely enough not to bind.

Frequently asked questions