The construction sector as a whole requires a higher percentage of skilled labour than manufacturing. In addition, good management and supervisory skills are important for the efficient execution of construction projects. In most developing countries, there is a severe shortage of all kinds of skilled labour for the construction industry. A large percentage of skills are not available locally. Moreover, apprenticeships and vocational training schemes appear to be grossly inadequate in both quantitative and qualitative terms. This means that a significant percentage of professional, managerial, supervisory and even craft skills are imported. It is common for local contractors to operate only on small residential project while the larger industrial and commercial projects are awarded to foreign-based construction firms, who remit most of the profits of out of the country.
The majority of small-scale firms are forced to operate informally because the construction in which they are involved does not comply with building and planning standards. This means they cannot participate in competitive tendering. They are also not in a position to take care of insurance, bonds, nor to secure sufficient working capital and/or materials credit to finance projects when payment by the client is delayed.