The construction industry is split into the firms that do the actual work and those that skim off their profit under the guise of supervision and regulation

You don't fatten the pig by weighing it. This good old agricultural maxim is as pertinent as it was 100 years ago, but now it applies to every aspect of our private, governmental and business life. Far too much resource goes into regulating and inspecting industry simply to generate statistics for spin-masters, employment for bureaucracies and fee income for their satellite consultancies.

We are suffering from a pandemic of unnecessary, usually counterproductive regulation, of the homegrown and Euro variety, and it is strangling almost every area of our lives.

In the construction industry so much effort is going into the inspection and measurement of the pig that it is slowly wasting away. Once upon a time, the government and the institutions supported and encouraged the contractors, designers, specialists and subcontractors that make up Real Construction. Now they subject it to pressure, penalties and coercion to meet moving targets laid down by continually changing policies.

Contractors' profits have fallen in the past 10 years from 1.5% net on turnover to 1.25%. As a result, the industry is fast approaching a crisis. In 2005, more than half of the construction companies that filed results with Companies House reported a loss.

Yet we are witnessing the construction industry being torn apart by the very people who make a living from supervising and regulating our work. This rapidly emerging Virtual Construction sector is the only one making money out of the process. Virtual Construction has become a broad and powerful church. It includes the supervising project managers, quantity surveyors and new-style service providers, as well as the housebuilders and developers who need to sublet the tricky building bit at rock bottom prices. The third group, headed by the government, includes the funders, client organisations and trade associations that are now our principle regulators.

Together they are pushing Real Construction closer to disaster by driving down prices while increasing the overall cost of building to the highest level anywhere in the world. There is something seriously wrong here. Our clients' money is going to pay for more unnecessary bureaucracy rather than helping the struggling constructors who do the work and take the ultimate responsibility for it.

It is the antithesis of the lean management promoted by Constructing Excellence. Readers with long memories will recall that this is about taking out of the process all those who don't add real value to the end product. Whoops! That's virtually everyone in Virtual Construction, isn't it?

In 2005, more than half of the companies that filed results with Companies House reported a loss

The question is, if we were to set up the industry from scratch today, applying lean principles, would we replicate the current management structure?

The answer inevitably is a resounding no. We are the only major industry that takes enormous production risks without authority over the design of our product or direct control of its costs. We have allowed Virtual Construction to impose a nightmarishly topsy-turvy business scenario in which the people who do the work and take the risk are working at cost, while their profit margins are creamed off by supervisors and regulators.

The UK needs a construction industry that can fulfil the Latham and Egan ideals at a fair profit. One that does produce real reliability of quality, cost and time without punishing the working constructors - and in the process, becomes the most efficient and competitive in the world.

We have one already, of course. It is called design and construct, where the principal contractor deals directly with the client and takes total responsibility for the success of the project with full authority over the design and cost. We just need to extend its use from the current 35% to 90% of our total workload.

As Virtual Construction rushes headlong into a highly politicised, designer-led Olympic construction programme, complete with three layers of supervision, the future for the Real Industry looks bleak. But I suppose that the leaner the pig becomes, the more likely it is to fly.