NEC ECC: Can the cost of rectifying a defect be withheld from monthly payments under option A?

Glenn et. al.
A Contractor is challenging that works they corrected were not due to a defect.
I presume the PM can only withhold the amount of the activity and unless he evokes cl. 45.1 then the costs associated with the removal, preparation etc. need to be bankrolled by the employer until contra charged?

If a Contractor is correcting something they have been instructed to do but they do not believe it is their risk under the contract then they would have to notify that it is a compensation event. If the PM doesn’t agree then the official remedy would be adjudication if the Contractor is adamant they are correct and want to take it that far.

In terms of payment under option A, Contractor is paid in accordance with completed items on their activity schedule. The cost of this work will not make the activity schedule until the compensation event is agreed/implemented. So in terms of your question, there will be nothing to “withhold” as there is no entitlement to be paid for it unless it is agreed as a CE and then implemented.

Under option C the works would be claimable as part of Defined Cost unless it fits a reason for being a disallowed cost, and the arguments will then be whether it is also a CE that should move the target cost.