Chapter 37 — Quiz

(c). Start interval = cycle time ÷ WIP = 92 ÷ 11 = 8.36 CD. A house goes on the front of the line every 8.36 days and one comes off the end every 8.36 days, permanently. (a) is how long one house takes, which by itself tells you nothing about the business.

(b). (a) is the trap, and it understates the loss by more than half. Once a trade's capacity (365 ÷ 9 = 40.56 houses/year) falls below the rate the line needs (43.64), that trade stops being a duration and becomes a ceiling. Output is no longer 11 ÷ 92 × 365; it is 365 ÷ 9. Loss = 43.64 − 40.56 = 3.09 houses/year, worth $196,000 in gross margin — every year, not once.

(d). Not the average, not the total, and definitely not (c) — that is the CPM question, and it is the wrong question for repetitive work. Each trade's line must have a slope at least as steep as the line's required rate; the shallowest slope governs everything behind it.

(b). A row of houses at the same stage is never a coincidence. It is inventory waiting on a trade whose capacity is below the line rate, and it is the cheapest diagnostic in production housing — free, visible from the truck, and available before any report shows it. (c) has it exactly backward: starting more houses raises cycle time and inventory without raising output.

(b). $12,400 of the $63,500 gross margin comes from $46,000 of options — a 27.0 percent margin rate against the base house's 13.0 percent. Roughly one dollar in five of the builder's margin is made in the design center. That single fact explains the designer on staff, the sales incentive structure, and why an option cutoff is a schedule gate with a dollar sign on it rather than a customer-service courtesy.

(c). There is no owner to bill — the builder is the owner. The bank funds after the milestone is verified, so everything spent between draws is the builder's own money. At an average unfunded balance of about $45,000 a house across 11 houses, Tessa Bright is standing in roughly $495,000 of its own working capital on this community alone. (d) is wrong twice: residential trades are generally paid on a short cycle with no retention.

(b). A purchase agreement is a real-estate contract: a promise to convey a completed house and its lot on a date. There is no owner during construction, no retention, and usually no liquidated damages — instead there is an outside date, after which the buyer may typically walk and recover earnest money, which is worse than LDs because you lose the sale and the house becomes inventory. Terms and buyer remedies vary by state; read yours.

(c). Tile costs more in material and roughly three times as much to install. If the allowance is material-only in the builder's mind and installed-cost in the client's, the labor overrun belongs to nobody until a lawyer assigns it. The fix is one line: state every allowance as an installed allowance — material, labor, and fee — or state explicitly and in bold that it is material only.

(c). Project size creates no exemption. Fall protection, ladders and stairways, excavations, electrical safety, respirable crystalline silica, and hazard communication all apply on a house lot. OSHA withdrew its long-standing residential exception to conventional fall protection in 2010; the current expectation is conventional fall protection at the trigger height, with a written site-specific plan available only where an employer can demonstrate infeasibility or a greater hazard. Confirm the current standard and OSHA's current directives before relying on any of this — interpretations in this area have changed and can change again.

(d). Transport limits, financing and appraisal friction, and state-by-state modular approval programs are all real, but the decisive one is utilization. A plant is cheaper than site-built only above a volume threshold, and offsite housing plants have a long history of opening in good markets and closing in the next downturn — not because the product failed but because the volume did. Note also that site work does not go away: a 60 percent cut in field labor is not a 60 percent cut in cycle time.

False — unless every trade has spare capacity. If any trade is already at its ceiling, throughput stays pinned there and Little's Law runs backward: WIP up, throughput flat, so cycle time rises. At Harbor Ridge with drywall capped at 40.56 houses a year, going to 14 in process moves the cycle from 99 to 126 CD and adds roughly $135,000 of unfunded inventory. Starting houses is not production; finishing them is.

True — the stage durations sum to exactly 92, deliberately. A production builder's protection is not slack inside the house; it is the buffer between trades across eleven houses plus the superintendent's ability to move a crew from a house that is not ready to one that is. Optionality across the line, not slack within the unit.

False. It is a widely used express warranty structure, not a legal standard. Statutory warranty obligations, implied warranties, statutes of limitation and repose, and mandatory right-to-cure procedures differ substantially by state and change with legislation. Never represent a warranty period to a buyer without confirming what your state requires and what your own written warranty actually says.

False. It is being the builder whose houses are ready when the crew shows up. Money does not buy capacity. A crew split across two builders takes nine days a house at $1.42 a foot or $1.60. Coastline Drywall split its crew because four wasted trips at $1,632 each consumed the margin on nearly five houses — a readiness problem, not a price problem.

False. Multifamily is a commercial project with residential finishes — institutional owner, real contract, submittal log, RFIs, schedule of values, retention, pay applications, OAC meetings, a lender wanting monthly reports. Almost everything in the first thirty-six chapters applies directly. The one genuinely residential thing it borrows is unit repetition, which makes the LOB ideas in §37.3 useful for the interior buildout. That is the whole of its special case.

A delay is a fixed quantity — twenty days lost, twenty days to recover. A rate mismatch is a difference in slope: drywall at 9 days against a line needing one house every 8.36 days diverges by 0.64 days per house and the gap never closes. House 4 waits 1.9 days, house 10 waits 5.7, house 22 waits 13.4, house 34 waits 21.0.

CPM cannot draw it because CPM answers "what is the longest chain of dependent work through one pass of this network?" — a question about a path. In repetitive work the binding constraint is a rate, and CPM has no vocabulary for "which trade's production rate is lowest, and is it lower than the rate the line needs?" Line of balance is built out of nothing else.

Because money does not buy capacity, and capacity is what is missing. A split crew hangs a house in nine days at any price, so the line rate stays pinned at 365 ÷ 9 = 40.56 houses a year. A premium may buy priority in the order the subcontractor serves its builders — worth roughly 1.2 houses a year here — but it pays for the symptom and leaves the cause running, so the wasted trips continue and so does the logic that produced the split. The two responses that change the rate are adding capacity and removing the cause; only the second is permanent, and only the second also protects every other trade on the line.

Insulation is not an air barrier. A batt stuffed behind a wire, compressed at a corner, or not in full contact with the air barrier still measures as the specified R-value on a submittal and still leaks. The blower door measures air leakage, which is decided by continuity — top plates, rim joist, penetrations, band joists, the sealed connection between the insulation and the air barrier.

The test happens on day 90 and the outcome is decided on day 53, at the pre-drywall walk. By day 90 the failure is behind finished drywall, paint, and trim, and it is effectively unfixable without opening the house. This is Chapter 36's point exactly: envelope execution, not envelope specification, decides performance.

1. The first house of a new plan. Nobody knows the durations, quantities, or conflicts. Tessa Bright's plan 2650 took 117 days instead of 92. Countermeasure: treat it as a prototype — schedule 25 to 30 percent more time, walk it at every stage with the trade leads, write down every field change, and update the plan set and the price list before house two. About eight hours of somebody's attention.
2. A plan revision mid-community. A discontinued window, a changed truss bearing, a new energy-code cycle. Houses 1–14 are built one way and 15–34 another, with no revision control and no record of which house got which. Countermeasure: a one-page revision log per community — date, what changed, which lots, who was told. Twenty minutes per revision, and the cheapest insurance in residential construction.
3. Any deviation from the standard. There is no change-order process because the system assumed nothing changes, so it gets handled verbally, unpriced, and half the trades never hear about it. Countermeasure: a written, priced, signed change before anybody touches it — Chapter 31's discipline, scaled all the way down.

(a) Required rate = 9 ÷ 104 × 365 = 31.59 houses/year. Cabinet capacity = 365 ÷ 14 = 26.07 houses/year. 26.07 < 31.59, so yes — cabinets are the ceiling, short by 17 percent.

(b) Output is capped at 26.07 houses/year, not 31.59. Cycle time = WIP ÷ throughput = 9 ÷ (26.07 ÷ 365) = 126 CD, not 104. Those extra twenty-two days are houses queuing in front of the cabinet crew — and they will be standing on the ground, painted and locked, waiting.

(c) 31.59 − 26.07 = 5.52 houses/year × $68,000 = $375,000 of gross margin a year, every year, until the constraint is removed.

(d) Crews required = required rate × days ÷ 365 = 31.59 × 14 ÷ 365 = 1.21 → 2 crews. With two crews, capacity = 52.1 houses/year, comfortably above 31.59, so cabinets stop being the ceiling and the cycle returns to 104 CD. Note that the second crew is only 21 percent utilized on the margin — which is exactly why the installer will resist, and exactly why the conversation has to be about the whole year's volume rather than the next house.

(a) The builder reads the allowance as material-only: material overrun = $34,200 − $22,000 = $12,200, plus labor that ran $26,400 against an assumed $9,800 = $16,600 he never carried, plus 18 percent on both. The client reads $22,000 as the installed price of her tile: overrun = $34,200 + $26,400 − $22,000 = $38,600 — a number that horrifies her — or, more likely, she assumes the labor was in the fixed price and only the material is chargeable, so she owes $12,200 and no fee.

(b) Material overrun $12,200 + uncovered labor $16,600 = $28,800, and 18 percent on that is $5,184. Total exposure: $33,984 on a single allowance line, and both readings of the contract are honestly arguable.

(c) Sentence one: "Each allowance stated in Exhibit B is an installed allowance and includes material, delivery, labor, and Contractor's fee; the Owner's actual selected cost, installed, will be compared to the allowance and the difference added to or credited against the Contract Sum." Sentence two: "Contractor's fee does apply to allowance overruns, and allowance underruns are credited to the Owner in full." Two sentences, drafted once, and the $33,984 argument never happens. Neither party ever had to be wrong for it to happen — that is what makes it a drafting failure rather than a character failure.