Relationships between System Loading and Cycle Time in a Residential Construction Production System

Production home building possesses characteristics similar to manufacturing processes (such as the construction of more or less similar houses repeatedly and a growing demand for mass customization of homes). Home builders generally utilize critical path method scheduling, cost estimating, and earned value analysis management tools to manage their production process. However, these tools are not responsive to many undesirable situations that arise during the production process, such as increasing cycle time and increasing amounts of work in process, both of which increase capital investment, decrease company financial performance, and slow product delivery to customers. This study examines relationships between cycle time, work in process, system throughput, new construction starts, and production system capacity using building permit data for new single family homes in Chandler, Arizona. The applicability of Little's Law, a basic equation used in factory production system design, to a residential production system is examined. This study shows a definite, predictable relationship between cycle time, work in process, and production system throughput. This study provides for further study of production system characteristics that have historically not been considered in construction management models, with the expectation of developing a new construction management system that will account for more of the characteristics of construction production systems that affect project performance and company financial performance.