Dice the bacon, then fry it on the stove top in a skillet until it is crispy, but not burnt. Turn off the heat under the skillet. Use a slotted spoon to remove the bacon. Use the cooked bacon in the salad.
Beat the egg with the sugar and water in a small bowl. Stir in the vinegar and whisk it all together.
Add this to the bacon fat in the skillet and turn the heat back on to medium-low. Heat and stir gently until the egg cooks. Season to taste with salt and pepper.