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NEC ECC: Can disallowed costs be calculated by the PM

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On an NEC3 ECC Option C contract can the PM only disallow costs that have actually been claimed?

The situation is as follows: the Contractor has wrongly undertaken certain works outside the boundaries of the site. This has resulted in damage to private property. However the type of work undertaken is required and has been carried out within the boundaries of the site - what is unclear from the Contractor's application for payment and financial systems is whether the work undertaken wrongly on private ground has been claimed for. Can the PM estimate what they consider this wrongly undertaken work could have cost and include as Disallowed Cost or can he only disallow costs that it is clear the Contractor has applied for payment for?

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