A few years back the Green Curmudgeon at Green Building Advisor, Carl Seville, suggested that batt insulation should be banned because the installations were consistently awful. He noted " We get what we pay for, and when we only pay bottom dollar for fiberglass batts, we get the performance we deserve."
It turns out that this isn't just a North American problem. Matthew Cutler-Welsh of New Zealand website Home Style Green points to an audit of 58 installations of insulation by the Energy Efficiency and Conservation Authority; Not a single installation was free of defects.
The installation faults found include: damaged insulation, folds, tucks, gaps or insulation overlap, and areas not insulated where they should have been. Insulation has been compressed, incorrectly fixed or supported, incorrectly fitted around top plates, downlights, auxiliary equipment, or extractor fans. Insulation has also been incorrectly fitted around electrical wiring and plumbing systems.
They are not shy about placing blame either, spreading it among installers, electricians, and plumbers. However sometimes the trades don't really have a choice, thanks to bad design.
The second contributory factor to some of these faults comes down to design making proper installation of insulation difficult or impossible in some places. This can refer to construction design, or design of plumbing, electrical, lighting, heating, or ventilation systems.... It is the designer who in the first instance will have an impact on whether the insulation can be correctly installed. When considering the design, they must ensure that construction R- values of the roof, walls, and floor meet the energy efficiency requirements of the Building Code.
There should be a designer or architect who decides what services go into insulated walls, how the wall is detailed, whether there is enough room and what insulation is chosen. Unfortunately, most of the time there isn't one, and as Carl says, people get what they pay for.