Purpose: The purpose of this paper is to investigate the impact of defects on the satisfaction of residential construction customers. Three working hypotheses were tested: first, defects in residential construction impact the customer satisfaction; second, different defects have different impacts on customer satisfaction; and third, interviewing customers about defects in their residential units is not a reliable method to collect data. Design/methodology/approach: The research investigated correlations between data on defects and customer satisfaction surveys carried out by a construction company on its projects. Data were cross-checked to determine what kinds of defects have the worse impact on customer satisfaction. Findings: The occurrence of defects does not necessarily jeopardize customer satisfaction, although it appears to be a concern to the customers who responded to the survey. When the occurrence of defects did interfere with customer satisfaction, it was found that the worse impacts resulted from the occurrence of multiple defects in a single unit, the inability of the construction company to communicate with the customer after a claim was filed, and the occurrence of functional defects. Results suggest that interviewing customers about the defect occurrence in their units is not a reliable method to collect data for research purposes. Practical implications: Results can be used to help companies better define continuous improvement activities and avoid the occurrence of defects that cause the worse impacts to customer satisfaction. Originality/value: Data availability is a challenge for studies on defects. This study had direct access to data from a construction company, which made the presented analyses possible.

Evaluating the impact of defects in buildings and ranking the most impactful ones enables construction companies to better choose which paths to take in light of continuous improvement activities to support more sustainable decisions regarding the design and operation of buildings. As a result, the risks of the different choices are more clearly identified while assessing all tangible and intangible aspects of residential building defects in a structured way. Although recent studies on managing construction defects in residential buildings have focused on monetary losses associated with maintenance activities based on the defect’s frequency and severity, these studies do not take into account the levels of customer satisfaction. To address this gap, this paper proposes a novel evaluation method of the impact of defects to support decision-making in managing defect occurrences in residential buildings. The goal is to rank the defects’ impact based on a combination of some critical aspects: frequency of occurrence, financial considerations on repairing such defects, the impact that these defects have on customer satisfaction, and the cost and complexity of preventing and minimizing these defect occurrences through continuous improvement activities. The method consists of a structured set of steps that use data from technical assistance departments and customer satisfaction surveys, where information about the users’ level of satisfaction and the occurrence of defects is available. In this paper, data obtained from a construction company were used to test and validate the proposed method. The method also examines the challenges and barriers associated with the technique and points out that difficulties in acquiring reliable data are a bottleneck for making conscious and sustainable decisions to address construciton defects. Moreover, the case study results highlight essential capabilities needed by companies to correctly assess the impact of defects, such as correctly logging data in a structured database and having skilled personnel to verify defects users might have complained about. The paper ends by proposing a set of guidelines to use the method and stressing that structured methods for decision-making are crucial to analyze construction defects in a structured way while also incorporating the user’s perspective. The proposed method is expected to improve sustainable managerial decisions where economic, environmental, social, and technical risks can be accounted for to enhance the quality of projects from the customer’s perspective. Such analysis can help optimize and prioritize the use of resources and minimize the economic impact of activities on the construction company.