Modeling the Effects of Lean Capacity Strategies on Project Performance

Common lean wisdom concerning efficient operations is to reduce variability in workflow throughput. Lean producers use various methods to dissipate production variability in a system that provides wide product variety in order to allow production to better match demand. Amongst these is the use of flexible capacity strategies to adapt to changeable conditions when this approach best suits. Yet, this is a part of lean thinking that is not yet well understood by the lean construction community. This paper models the effects of adaptable capacity strategies on project performance. Construction operators tend to match capacity to situations of minimal variability. Consequently, they do not always have sufficient capability to efficiently engage the changeable conditions commonly encountered in construction projects. The analysis in this paper focuses on the effects of additional capacity on project performance. A stochastic model was run over a number of projects, indicating in all cases improved performance when an optimal amount of capacity was added. The best results achieved were a 40% reduction in project delivery time and 10% reduction in project costs. It is concluded that further research is needed to develop more adaptable capacity management strategies, as there is strong evidence to suggest improved project performance as a result.