Generally speaking the cost of correcting Defects is paid as part of Defined Cost. That is because it is within the definition of Defined Cost, but is not within the definition of Disallowed Cost. The only exception to that is that the cost of correcting Defects after Completion is part of the definition of Disallowed Cost, and is therefore not paid. The risk (or reward) of defective work in Options C & D is shared with the Contractor, in exactly the same way as the opposite to that risk, i.e. the cost of carrying out the work in the first place, is.
The part of Clause 25.2 you refer to needs to be read in conjunction with the previous sentence from the same clause. That refers to “…services and other things as stated in the Works Information….”. This therefore does not refer to carrying out the works themselves. It would apply, for example, if the WI required the Contractor’s to train the Employer’s staff to use the works. That is not part of the works themselves but would be a service the Contractor is required to provide.