API 650's roundness limitation would not be suitable for this type of deformation.  The roundness limitation in API 650 is for the smooth operation of floating roofs.  It is has no bearing on a structural deformation.

The roundness tolerance in API-650 applies whether the tank has a floating roof or not, so I don't know that that is the issue so much.  But the loadings are fundamentally different.  A tank shell will tend to round up when filled, and if built out-of-round, will get a lot of distortion and possibly buckling when placed in service.  This is not the case with a skirt, though, and I would think out-of-plumbness would be more critical in that case.

Section 7.5.1 states that the purpose of the tolerances provided in 7.5.2-7.5.7 are for apperance and for the proper functioning of the floating roof.  The shell could be out of round but still be structurally sound.  

Of course it is good practice to build any tank within the roundness tolerances to reduce the deformation as described by JStephen.

If your skirt is round pre-hydro and goes out of round during hydro you have a problem.

Thanks JStephen  and Yosamitysamm.......for your valuable inputs.  

This tank atmospheric ,cone roof and bottom cone type supported by skirt and internal supporting structure. The incident happened during the hudrotest. As a preventive measure two stiffner rings welded on skirt  externaly approximately 1.5 meters distance. Rehydrotested. that time the deformation noted again only above second stiffner ring and bottom cone to skirt welding.

Now I am looking for the code/ sections describing the tolerance levels of the deformations noted.

kalamani

Consider posting pictures or sketches showing details of the problem

What is the height of the shell ?