Pipeline Workshops: Improvements to the Game

Enabling builders to test the principles and lessons learned is a significant part of the takeaway we offer in a Pipeline workshop.  We repeatedly receive feedback from attendees saying that the opportunity to simulate production in a progressive series of scenarios enables them to “see” production in a way that they have not previously experienced.

There is nothing comparable to a Pipeline game, anywhere.  Although the game is already a tremendous tool for teaching production principles, we, nevertheless, take seriously the opportunity to make it better.

And, we do listen.  Partly as a result of feedback, we are making two significant changes to the game.

The first change is to shorten the duration of the game, without diminishing its effectiveness, so that we can run more scenarios in the same amount of time;  basically, we halved the number of rounds.  The unexpected benefits of shortening the game:  (1) it makes every operating decision more consequential;  (2) it makes the results more realistic, easier to comprehend, therefore, more intuitive.

The second change is to more realistically reflect the outsourced nature of homebuilding production.  Previous versions of the game used the resources to reflect both the capacity of the system, and the cost of that capacity.  That arrangement is appropriate for a manufacturing operation or even a project management organization, but a more accurate reflection of homebuilding production is to separate capacity and cost.

In homebuilding, the external resources that determine production capacity are a part of Cost of Sales (which makes them a direct, variable cost);  Cost of Sales is a measure of product cost, not capacity cost;  rather, it is the indirect, non-variable cost associated with internal resources – part of Operating Expense (overhead) – that determines the cost of capacity.

In previous versions of the Pipeline game, using the resources to reflect capacity and cost allowed us to disregard Cost of Sales, and focus on Throughput, which is more closely related to residual Gross Margin.  In the new version of the game, we bring Revenue and Cost of Sales back into the picture.  The external resources in a game now only define the production system’s capacity, and their cost is reflected in Cost of Sales, as a percentage of Revenue;  they are now the true, variable costs associated with production.

Throughput is now Revenue, less Cost of Sales, which is still Gross Margin.  This represents a huge stride in reconciling these terms, and making operating decisions easier to connect to financial outcomes.  Operating Expense is now an imposed (budgeted) value, reflecting the cost of the internal capacity required to manage work-in-process;  it is a non-variable cost, and it is now only indirectly related to expected project completions.

The overall effect is now a board game much more reflective of a homebuilding operation;  the lessons are now much easier for builders to understand, with a production simulator that exponentially increases learning over that which occurred before.

The new version of the game gets rolled out next week at the Housing Leadership Summit, and it will then become part of every subsequent Pipeline workshop.

We are looking forward to it.

 

2 Comments

  1. Ping from karl:

    As I home designer who uses 3D CAD I often feel I’m building the house in a virtual world. Do you think your game could be used / adapted to the designers’ realm to improve design processes? Or at the least improve their understanding of the eventual construction process so they design with it in mind?

  2. Ping from Fletcher Groves:

    Karl — the Pipeline game simulates a homebuilding production system; it connects operating decisions to business outcomes, and deals with the biggest problem facing any project portfolio management enterprise (what homebuilding clearly is), which is variation.

    It would not be suitable for your proposed use.