Carrot and stick: how to reduce the amount of defects in Danish construction

Defects are considered a lack of product quality and represent an economic loss. Since 1986, systems or initiatives applying a carrot-or-stick approach have been implemented in the Danish construction sector to improve the quality of buildings. The initiatives range from mandatory solutions to more or less voluntary benchmarking or insurance-based systems aimed at specific sub-sectors.
Based on a literature review including web-pages the different systems and initiatives are presented. The different approaches and some of the fundamentals or institutional settings in which these systems operate are discussed.
Insurance-based mandatory systems for social housing and urban renewal introduced around 1990 showed remarkable reduction in the volume of defects, but when more or less voluntary systems were introduced for single-family houses a similar success was not seen. This is explained by too little information about the cost-benefit and the easy access to avoid taking out an insurance policy. Mandatory systems seem to be preferable, depending on the target group and the institutional settings.
Since 2009, authorities no longer examine the project documentation when issuing building permissions for smaller buildings. Together with the more performance-based Building Regulations this is criticized for favouring large contractors. The amount of requirements that companies must fulfil should be put against the risk of excluding small contractors, without knowing whether smaller contractors construct houses with lower quality.