Just to add to Neil's answer, the Project Manager has no right to withhold amounts due on the basis of a subjective opinion that something may or may not apply. The contract gives the Project Manager the right to inspect accounts and records, which could be undertaken periodically as the work proceeds. It sounds like this hasn't occured and now an amount is being withheld to allow the PM an opportunity to inspect this information. As Neil has stated, you should be re-paid the amount plus interest, if not deducted correctly under the contract.
The opening sentence of the Disallowed Cost clause in NEC3 'cost which the Project Manager decides' has been deleted in NEC4, which reinforces the requirement for any such assessment to be undertaken clinically and methodically. An incurred cost can only be treated as Disallowed Cost only when it can actually be determined to fall under one of the stated bullet points. A subjective and 'global' application is not a correct assessment of Disallowed Cost under the contract, even though the PM is stating that his assessment is not Disalowed Cost.
Although the contract doesn't state a procedure, why not suggest to the PM that the review leads to an outcome; Defined Cost, Disallowed Cost or not proven, and you have timescales in which to address any concerns or queries before amounts are treated as Disallowed Cost. This is simlilar to the practicalities of accepting a programme, whereby minor issues are dealt with by giving the Contractor an opportunity to correct them (say 2 months), before the PM can not accept the programme. Neil has already suggested 10.1 and I think this is appropriate as the contract doesn't cover every practicality so a little co-operation and common sense need to apply.
The opening sentence of the Disallowed Cost clause in NEC3 'cost which the Project Manager decides' has been deleted in NEC4, which reinforces the requirement for any such assessment to be undertaken clinically and methodically. An incurred cost can only be treated as Disallowed Cost only when it can actually be determined to fall under one of the stated bullet points. A subjective and 'global' application is not a correct assessment of Disallowed Cost under the contract, even though the PM is stating that his assessment is not Disalowed Cost.
Although the contract doesn't state a procedure, why not suggest to the PM that the review leads to an outcome; Defined Cost, Disallowed Cost or not proven, and you have timescales in which to address any concerns or queries before amounts are treated as Disallowed Cost. This is simlilar to the practicalities of accepting a programme, whereby minor issues are dealt with by giving the Contractor an opportunity to correct them (say 2 months), before the PM can not accept the programme. Neil has already suggested 10.1 and I think this is appropriate as the contract doesn't cover every practicality so a little co-operation and common sense need to apply.