Cut to the bone

I was climbing The scaffolding outside A large apartment block in South Kensington the other day. The aim was to sort out a dispute about the quality of some paintwork; it had already been through the foreman and the contracts manager, and now I was arguing with the managing director of the painting contractor. After a lengthy discussion, he conceded the point about the paint, but made another, larger one about the rules of the game he was being expected to play.

He said: "It's impossible to achieve the quality standard of finish that you require us to reach while everything is done to the lowest bid. We constantly have to second-guess what other firms will bid and put in a lower price."

What this illustrates is the fact that there are two construction industries. There is the one that struggles to get by in an arduous and hostile environment, and there is another that sits on it and delivers homilies on trust, co-operation and supply-chain integration.

On top is industry A: the large contractors and professional practices, that occupy their relatively comfortable position because they are closer to the clients' money. As we know, the closer one is to the money, the easier life tends to be. The corollary is that the further away you go, the less secure life becomes – a fact that is not lost on industry B, the small and medium-sized companies like the painting contractor, who actually do the work on site.

The large companies take the money and subcontract practically everything. The work on site is carried out by a mass of small subcontractors working in a ferociously cut-throat environment. The worker who is laying the bricks or knocking in the nails (perhaps the only genuinely irreplaceable group in the industry) is at the apex of an inverted pyramid of main contractors, contract managers, engineers, architects, surveyors, QSs and subcontractors.

At that distance from the client, everything is cut to the bone. Subcontractors working in the world of the lowest bid know they are one bad month away from non-existence. Industry A is also working in a competitive environment, but has the financial resources to weather short-term downturns. They have the breathing space to take a broad view of the industry.

The homilies I mentioned above are, of course, produced by the bodies set up to realise the vision of New Construction in the Egan reports.

In fact, the structure of the industry means that they have little prospect of achieving anything, other than creating work for AGCs (abbreviation guide compilers). I know Egan criticised lowest bid tendering and the culture of begger your neighbour that it gives rise to, but there is no sign of this making any difference in industry B. Here it is a question of doing what you can to survive: bogus employment, bogus self-employment, illegal labour, tax fiddles and compromised safety are endemic.

This effect is magnified by the industry's version of Gresham's Law that bad money drives out good. In construction, bad companies drive out the ones that carry out their legal and moral requirements. Firms that cut safety will win contracts based on cost. Over a period of time, good firms will be forced to join the competitors that they can't beat.

All the Egan self-help organisations exist in industry A and have never had anything but a theoretical understanding of the conditions on which life is lived in industry B. The people working in there have never even heard of Egan, never mind Constructing Excellence or Be. It is not that they disagree with them; it is simply that Rethinking Construction has the same relevance to them that a discussion of Shakespeare has to the family cat. If you walked on to any building site in the country, there's a slender chance that some of the site management may have heard of these bodies – but nobody else will have.

As things exist at the moment, the Egan revolution consists of small elites talking among themselves, expressing pious hopes and empty dreams. For the two industries to follow the self-help route, the intended outcomes must be relevant to both halves of the industry. A genuine effort must be made to bridge the gap between A and B, and there has to be a meaningful change at site level.

My experience tells me that it will be difficult to overthrow the tyranny of the lowest bid under any circumstances, and impossible to do so solely with a top–down approach. The people working in industry B must see the relevance and the need for change, and be given a situation that will allow this to take place. But it is doubtful if the industry has the will to let this happen, and the managing directors of small painting contractors are going to continue to struggle to play a game that is barely worth the candle.