Chapter 37 — Exercises

Work these with a pencil and a calculator. Nothing here needs software. Several produce artifacts that belong directly in your Willow Street Project Notebook. Selected answers appear in Appendix J; the calculation items in Part C carry their numeric answers here, in <details> blocks, because the arithmetic is the point and you should be able to check yourself.

Difficulty legend: ⭐ basic · ⭐⭐ applied · ⭐⭐⭐ advanced judgment · ⭐⭐⭐⭐ research and extension

The canonical Harbor Ridge figures you will need throughout:

One standing rule before you start. Residential lien law, homeowner-protection and disclosure statutes, warranty periods and right-to-cure procedures, contractor licensing, and municipal inspection sequences vary substantially by state and locality and change over time. Where an exercise asks you to state a requirement, state it for your jurisdiction, cite where you found it, and write down the date you looked. Never quote one from memory.

Part A — Conceptual Understanding ⭐

A1. Write out Little's Law in the three forms used in §37.2.1 — throughput, start interval, and work in process — and say in one sentence each what a production superintendent uses each form for.

A2. Colton says: "You're managing a project. I'm managing a line." Unpack that in under 120 words. Name the unit of production in each case, the question each manager is trying to answer, and the number each one is trying to protect.

A3. Name the five segments of residential construction from §37.1, and for each one, name the single risk that kills you. Then say which segment a 240-unit wood-frame apartment building over a concrete podium actually belongs to, and why the answer is uncomfortable.

A4. Explain why a CPM schedule is the wrong tool for a 34-house community. Give both reasons — the mathematical one and the one about people.

A5. State the four rules of a line-of-balance chart from §37.3.2. Then say which one is the discipline and which three are bookkeeping.

A6. What does "even flow" mean, and why do production builders who abandon it in a good market get hurt in the next one?

A7. In production housing, what replaces the submittal log, the RFI process, and coordination drawings? Name the mechanism in one word, and then name the three places §37.6.1 says it breaks.

A8. Options are 10.5 percent of Harbor Ridge's revenue and 19.5 percent of its gross margin. State two consequences of that fact — one for how the sales office is staffed, one for how the schedule is gated.

Part B — Applied Analysis ⭐⭐

B1. A commercial project manager takes a job as a division manager for a production builder. In her first month she builds a 1,530-activity CPM schedule for the community and starts a submittal log. Describe, specifically, what she will find at the end of month two, and name the one artifact from her commercial toolkit she should have built instead.

B2. Colton's regional manager tells him output is down and instructs him to start four more houses. Colton says no. Write the three-sentence explanation Colton gives — no jargon, no formulas — that makes the regional manager understand why starting houses is not production.

B3. You walk a production community you have never seen before. Seven houses are standing at the same stage with nobody in them, doors locked. What have you found, what is the very next question you ask, and who do you ask it of?

B4. A production builder introduces a new floor plan mid-community. The first house of the new plan takes 117 days instead of 92 and generates eleven undocumented field decisions. Write the four-step prototype protocol you would put in the company's operations manual so that house two does not repeat house one. Estimate the total labor hours it consumes.

B5. Tessa Bright's window supplier discontinues a unit in month seven. Houses 1 through 14 have the old window; houses 15 through 34 will have a new one. There is no submittal log and no revision control. Describe the specific document you would create, what goes on it, and the exact scenario five years from now in which someone will be grateful you did.

B6. A remodeler and a production builder both post a 9-out-of-10 technical quality score. One gets three referrals a quarter and the other gets a licensing-board complaint. Using §37.8.3, name the four operational practices most likely to account for the difference, and explain why none of them appears on a quality inspection form.

Part C — Calculations & Deliverables ⭐⭐–⭐⭐⭐

C1 — Cycle time, start interval, and the company's line ⭐⭐

Tessa Bright Homes runs a second community, Sable Point: 26 lots, 9 houses in process, and a 104-calendar-day cycle (larger plans, steeper lots, a longer foundation stage).

(a) Sable Point's throughput per calendar day and its annual output. (b) Its start interval. (c) How long the 26 lots take from the first excavator to the last closing. (d) Tessa Bright closes about 90 homes a year. Harbor Ridge and Sable Point together produce how many? What must the company's third community produce, and — if it runs a 92-day cycle — how many houses does it carry in process? (e) §37.2.1 estimated company-wide WIP at 22.7 houses by applying Little's Law at a 92-day cycle. Add up the three communities. Why is the real number higher, and what one word describes the difference?

C2 — One day in a stage, and one crew too few ⭐⭐

Ardent Framing frames a Harbor Ridge house in 12 calendar days per crew and runs two crews on the line.

(a) Ardent's crews slow to 13 days per house. Is framing now the ceiling? What are the new cycle time, annual output, lost revenue, and lost gross margin? (b) Instead, Ardent loses a crew to another builder and runs one crew at 12 days. Now what? Give capacity, output, cycle time, and the annual revenue and margin loss. (c) Compare (a) and (b) in one sentence that a superintendent could repeat from memory. (d) Ardent offers to guarantee two crews at Harbor Ridge permanently, in exchange for raising framing labor from $8.10 to $8.55 per square foot on a 2,180 SF plan. Price the offer annually, and find the probability of losing a crew at which the offer breaks even.

C3 — Read the line and find the throttle ⭐⭐⭐

Here is every trade on Colton's line, with days per house per crew and the number of crews working Harbor Ridge.

(a) Compute each trade's annual capacity: crews × 365 ÷ days. (b) The line requires 43.64 houses a year. Which trade has the least headroom, and how much? (c) Now read the chart below. Trim has gone from 8 days a house to 10. t is the day a house is genuinely ready for trim; T is the day the trim carpenter actually starts.

 House                                       time  ->  (each column = 5 calendar days)
   |
 H12|                     F      M    D   t        T     trim waits 18.0 days
 H11|                   F      M    D   t      T         waits 16.4
 H10|                 F      M    D   t     T            waits 14.8
 H09|               F      M   D   t     T               waits 13.1
 H08|             F      M   D   t    T                  waits 11.5
 H07|           F     M   D   t    T                     waits  9.8
 H06|         F     M   D   t   T                        waits  8.2
 H05|       F     M   D   t   T                          waits  6.6
 H04|     F     M   D   t  T                             waits  4.9
 H03|    F    M   D   t  T                               waits  3.3
 H02|  F    M   D   t T                                  waits  1.6
 H01| F    M   D   tT                                    waits  0.0
   +--------------------------------------------------------------
     0    25   50   75   100  125  150  175  200  (calendar days)

     F = framing    M = MEP rough-in    D = drywall
     t = house READY for trim     T = trim carpenter actually starts

State the divergence per house and prove it from the two rates. Then give the new capacity, output, cycle time, and annual margin loss.

(d) Apply the crew-count formula from §37.3.5 — crews required = required rate × days per house ÷ 365, rounded up — to all twelve trades. Which trades are carrying a crew they do not strictly need, and what is the honest explanation for that? (e) In one paragraph: what should Colton do about interior trim before it breaks, and how would he know it was about to?

C4 — Build the draw schedule and find the working capital ⭐⭐⭐

Tessa Bright's plan 2650 carries a vertical construction cost of $294,000, financed on a construction loan with the same six-draw structure and percentages as §37.7.1: 15 / 10 / 25 / 20 / 20 / 10 at cycle days 12, 19, 37, 53, 73, and 92. The bank funds 20 calendar days after each milestone (inspector, verification, wire).

Cumulative cost the builder has actually incurred:

(a) Build the draw table: milestone, cycle day, percentage, amount, and funding date. (b) Compute the unfunded balance — cumulative incurred minus cumulative funded — at each day in the table above, plus day 112. (c) What is the peak unfunded balance and on what day does it occur? (d) The bank's inspector goes from a 3-business-day turnaround to 7, adding 6 calendar days to every funding date. Recompute the peak. Then compute the additional working capital this costs Tessa Bright across 11 houses in process, and the annual interest on it at 9.5 percent. (e) A supplier offers 2 percent off for payment in 10 days instead of 30. Should the CFO take it? Show the annualized rate, and then give the reason a production builder might decline anyway.

C5 — What thirty days costs a spec house ⭐⭐⭐

Tessa Bright builds one plan 2650 as a spec — no buyer, the builder's own money.

(a) Daily construction-loan interest at 8.0 percent, 9.5 percent, and 11.0 percent, and the 30-day cost at each. (b) Total hard carry for 30 extra days at 9.5 percent, and the cost per day. (c) Express the hard carry as a percentage of gross margin. (d) Add market risk: a 1.5 percent softening in the local market over a quarter. What is that worth on this house, and how does it compare with the hard carry? (e) How many house-slots of Colton's line does a 30-day standstill consume? (f) The sales manager proposes cutting the price 2 percent to move it now. How many days of carry does that price cut buy, and what is wrong with answering this question on carry alone?

Part D — Judgment & Ethics ⭐⭐⭐

D1. A production builder prints the sentence "Every day of cycle time is worth $29,800 a year" on a poster and hangs it in the trailer where every crew sees it on the way in. Argue that this is good management. Then argue that it is the creation of a hazard, using canon theme #4 and the third finding of the Northgate scaffold near-miss. What would you hang instead, and what would you say at the orientation?

D2. Options carry a 27.0 percent gross margin against the base house's 13.0 percent. The design center is staffed by a designer whose job is to help a buyer spend more. Where is the line between good salesmanship and taking advantage of a first-time buyer's inexperience with money they are borrowing for thirty years? Name three specific practices you would require of your design center, and one you would forbid.

D3. A custom builder sets allowances from a standard sheet at a level that produces an attractive contract price, and wins the job over two competitors who priced the same house higher and more honestly. Is that unethical, merely competitive, or a foreseeable trap? Defend your answer, then write the two sentences you would put in your own contract to make sure you are not doing it accidentally. Ground both in Case Study 2.

D4. Coastline Drywall lost $6,528 of payroll on four trips to houses that were not ready. Colton's price list contains no mechanism for paying a subcontractor for a wasted trip, and never has. Should Colton pay it anyway? Argue both sides — including what precedent a payment sets with the other eleven trades on the line, and what precedent not paying sets — and then say what you would actually do and why.

D5. A production builder's warranty manager notices that responding to a callback within four hours instead of forty-eight is the single strongest driver of a customer's online review, and that reviews drive sales. He proposes staffing to a four-hour response. The division manager points out that the customer has already closed and the money is already collected, and that the same headcount spent on the line is worth $29,800 per recovered day. Evaluate the argument on its own terms, then say what it reveals about how a company decides what to measure.

Part M — Mixed / Interleaved Practice ⭐⭐–⭐⭐⭐

M1. With Chapter 14 — CPM, and why it does not fit here. Build the activity list and logic for one Harbor Ridge house from the 21-stage sequence in §37.4. Run a forward and backward pass on the first eight stages. Report the critical path and the total float. Then answer three questions: (i) how many activities does the same network contain for all 34 houses; (ii) what happens to the "critical path" when you resource-load it so that the framing crew cannot be in two houses at once; and (iii) name the constraint that governs the community and show that it does not appear anywhere in the network. Close with two sentences on what a duration is in CPM and what a duration becomes in line of balance.

M2. With Chapter 27 — flow, variability, and the reliability chain. Five sequential trades each hand off at 90 percent reliability. Compute the probability the fifth handoff lands on time. Now apply the same idea to a line rather than a single building: Colton's four unready houses in nine weeks were four broken handoffs, and they did not merely delay four houses — they changed a trade's rate. Explain, in under 200 words, why variability in a repetitive line accumulates instead of averaging out, and why a two-day inter-trade buffer and a one-house buffer ahead of drywall are the correct countermeasure rather than more float inside each house. Finally, map Colton's ready-check onto the Last Planner make-ready screen: which of the eight constraint categories does each row of the check remove?

M3. With Chapter 36 — the energy code applies to houses too. A 2,180 SF Harbor Ridge house must pass a blower door test and a duct leakage test at cycle day 90, performed by a third-party rater, and the house cannot get its certificate of occupancy without them. (a) Explain why the test is actually decided on day 53 and not day 90. (b) Give five specific things Colton looks at on the pre-drywall walk that determine the blower-door result, and for each one say what it costs to fix on day 53 versus day 90. (c) A house is insulated exactly to the specified R-value and fails the test. Explain how that is possible to a buyer, in plain language, in under 80 words. (d) Now do the same analysis for Willow Street: name the two envelope details on a 24,000 SF community center where execution — not specification — decides the outcome, and name the person on your team who owns each one.

M4. With Chapter 32 and Chapter 34 — draws, pay applications, and cash that is not profit. Put the Northgate G702/G703 pay application and the Harbor Ridge draw schedule side by side in a table with six rows: who pays, what triggers payment, who verifies, what is withheld, how long the money takes, and who finances the gap. Then answer: Kestrel bills Meridian monthly and waits 30 days; Tessa Bright bills nobody. Which company is carrying more risk per dollar of revenue, and what evidence would settle it? Close by explaining why a production builder's balance sheet can be healthy and its bank account empty in the same week.

M5. With Chapter 16 and Chapter 19 — leverage without a subcontract. Cardinal Mechanical holds a $6,400,000 lump-sum subcontract on Northgate. Fairwater Plumbing holds a price list. (a) List every source of leverage Ray has over Cardinal that Colton does not have over Fairwater. (b) List every source of leverage Colton has that Ray does not. (c) Chapter 19's threshold concept is that you manage the people who contracted to do the work, and your leverage is the subcontract, the schedule, and the coordination — not authority. Restate that threshold concept in its production-housing form, in one sentence. (d) A scope gap appears between the framer and the HVAC contractor at Harbor Ridge — nobody has priced the chase framing for the second-floor supply trunk. Where does that gap get resolved, by whom, and what is the residential equivalent of the scope sheet that would have prevented it?

M6. With Chapter 31 and Chapter 29 — the change that got built before it was priced. Northgate's CO #14 cost Kestrel $43,650 unrecovered because a verbal go-ahead became built work before there was a written directive, a price, or a time-impact analysis. Case Study 2's four unsigned change orders cost Garrett Vance $18,600 the same way. (a) Put the two side by side and identify the four failures they share. (b) One is a $47.5 million hospital and one is a custom house. Which was more damaging relative to the contract, and show the arithmetic. (c) Write the single sentence — the same sentence — that a project manager says at the Northgate preconstruction meeting and a custom builder says at the Fairbairns' kitchen table. (d) Explain why acceleration after a change is not free of non-monetary cost, and connect it to what happened in Northgate weeks 34 to 36.

Part E — Research & Extension ⭐⭐⭐⭐

E1. Price your own building department. For the jurisdiction where you work or study, find out — from the building department itself, not from a summary — the residential inspection sequence, the daily request cutoff time, the current turnaround in business days, whether combined or partial inspections are permitted, and whether insulation and energy verification are inspected by the municipality or by a third-party rater. Write it as a one-page table. Then compute what a one-day improvement in average turnaround across seven inspections is worth on a line running 43.64 houses a year at $63,500 of margin, and write the three-sentence email you would send your team about it. Note the date you gathered the information; these practices change.

E2. Read your state, then read the state next door. Pull the primary text for four things in your state: residential contractor licensing or home-improvement contractor registration and what it requires in a written contract; mechanic's lien rights on an owner-occupied residence, including any homeowner notice and any statutory waiver forms; any statutory right-to-cure procedure a homeowner must follow before filing a construction-defect claim; and whether your state recognizes an implied warranty of habitability or workmanlike construction on a new home and whether it can be waived. Then do the same for one neighboring state. Produce a two-column comparison, cite the statute for every row, and date it. Where you cannot confirm something, write unresolved — confirm with counsel rather than guessing. This is Chapter 5's discipline applied to houses, and it is the single most valuable hour in this chapter's reading.

E3. Measure a real line from the sidewalk. Find an active production community near you. From public streets only, and without entering any lot or interfering with any work, record on three visits two weeks apart: the number of houses under construction and the stage each one is at, using the 21-stage list in §37.4. From that data estimate the community's WIP, its start interval (from how far the front of the line advanced between visits), and its cycle time and annual output by Little's Law. Then look for a queue: are several houses standing at the same stage? Write a one-page memo naming your estimated constraint and the two pieces of evidence you would ask the superintendent for to test it. Compare your estimate to Harbor Ridge's 11 / 92 / 8.36 and say what is different and why.