The development of local contracting industry in developing countries, able to mobilise and effectively utilise local human and material resources, is seen as an important means to promote employment, improve efficiency and at the same time an efficient way to develop and maintain infrastructure. An increased focus on labour-based construction and maintenance techniques in the development of the local contracting industry may significantly improve upon the effectiveness and efficiency of the operations, and at the same time, increase the poverty alleviation efforts through increased employment creation ad income generation.

Work carried out by the ILO has shown that the constraints on the use of labour-based techniques by the private sector have more to do with the general problems faced by small-scale contractors than with any basic difficulty with the techniques themselves. This has a significant bearing on how one should foster the proper development of a local construction industry. When changing public executed operations to private sector implementation, a serious client has to address these issues through a programme approach to create an enabling environment.

In seeking to develop local capacity in the construction sector, i.e. contractors as well as consultants, it will be important to look at the environment in which they operate. This includes the capacity and ability of the client organisations to cope with their new and changed role as contract managers. For small-scale contractors, creating an enabling environment includes removal of barriers to their entry into the market, and to their growth and sustainability.

Without compromising on the demands of the finished product, the ILO has successfully demonstrated, in a number of countries, the viability of private sector executed labour-based programmes. These programmes include training and capacity building at various levels to all partners involved, both public and private sector, in labour-based technologies and in business and contract management.

The real challenge now being faced by governments is to facilitate real market driven growth and competition for the construction industry. This means setting up programmes and incentives to encourage truly the domestic private sector to be a viable option to the government/donor driven contracting. For this to happen, contractors associations and construction councils alike that would be serious in development must take on responsibility in developing structured training and mentorship programmes and be fully professional, and to the extent possible, self-funding operators.

The policy environment for small-scale contracting development is further described under the ILO's Employment-Intensive Investment Programme (EIIP) web page on Private Sector Support and Labour Standards.