Add the olive oil to a deep skillet over medium-high heat and once it’s hot, add the bite-size pieces of chicken. Season with salt and pepper and allow the chicken to sear, cooking completely through then remove from the skillet.
In the same skillet, melt the butter over medium-low heat then whisk in the flour and cook for 3 minutes.
Slowly add the milk, whisking over medium heat and scraping up any brown bits remaining from the chicken.
When it’s completely combined and bubbly, add the water, stock, dry mustard and a generous seasoning of salt and pepper.
Pour in the UNCOOKED macaroni to the sauce, reduce the heat to medium-low, cover and allow the pasta to gently cook stirring occasionally for 8-10 minutes or until the pasta is al dente.
Remove the skillet from the heat source and slowly add the cheeses a little at a time, combining thoroughly then fold in the pesto and chicken. Taste and adjust salt and pepper.