Defect Costs in Residential Construction

The residential construction industry is an important contributor to the Australian economy; the industry employs a very large component of the national workforce, and yet the industry is plagued by defective work and poor quality. Previous research has revealed that defects and rework are endemic in the residential sector. In an attempt to quantify the degree of defects being experienced in new residential construction this paper provides an analysis of defects that were recorded by a government-owned housing insurance organization, the Housing Guarantee Fund. This research represents one of the most comprehensive research studies of building defects undertaken to date in Australia. The data used were not based on a sample like previous studies but instead represent all new houses constructed in Victoria, Australia between 1982 and 1997. An analysis of the data revealed that one house in eight reported defects, and that the cost of rectification was 4% of the construction contract value. The paper discusses the nature of the most important defects and investigates the impact of contractor type and building type.