Since 2007, Ireland has suffered a circa 80% reduction in construction output. This has resulted in bankruptcy, unemployment and bad debt. Contractors have attached greater emphasis to production efficiency and cost reduction as a means of survival. An action research (AR) strategy was used to improve processes adopted by a small/medium enterprise (SME) contractor for the control of defects in its supply chain. It is conservatively estimated that rework, typically, accounts for circa 5% of total project costs. Rework is wasteful and presents an obvious target for improvement. The research reported here concerns the (first) diagnosing stage of the AR cycle only, involving: observation of fieldwork, analysis of contract documents, and semi-structured interviews with supply chain members. The results indicate potential for supply chain participants to identify root causes of defects and propose solutions, having regard to best practice to avoid reoccurrence. A lack of collaborative forums to contribute to production improvement was identified. Additionally the processes used to collect, manage and disseminate data were unstructured and uncoordinated, indicating scope for developing more efficient methods. The findings indicate a good understanding of the potential benefits for supply chain collaboration but suggest that the tools and knowledge to collaborate are currently lacking in the SME sector.