If fabricated Plant and Materials failed in material and workmanship test, can the Project Manager Disallow the cost of the said Plant and Material?
I assume from the reference to ‘Disallow’ with a capital initial that you are working under a cost based option i.e. C, D or E in which case the same clause applies for Disallowed Cost.
That clause is 11.2 (25). While other sub-clauses might apply, it is most likely that the 4th and 5th main bullets points (after “and the cost of”) may apply as something failing a test will be a Defect.
Taking the 4th bullet first, this only applies if theContractor is correcting a Defect after Completion. From what you say, the Contractor is still constructing the works so this does not apply.
Taking the 5th bullet, in plain English, this is where the Contractor - which would include a Subcontractor as defined in the contract and probably is the case as you say it is “fabricated” for this contract - does not follow a methodology stated in the Works Information and not following this results in a Defect. So you need to check the Works Information for any method related statements and have some evidence that not following this method resulted in the Defect.
Regardless, the Contractor may be able to recover some of the cost under their subcontract.