Project Classification

Labour Intensive Projects

Labour refers to the people required to carry out a

process in a business.
Labour-intensive processes are those that require a
relatively high level of labour compared to capital
investment.
These processes are more likely to be used to produce
individual or personalised products, or to produce on a
small scale
The costs of labour are: wages and other benefits,
recruitment, training and so on.
Some flexibility in capacity may be available by use of
overtime and temporary staff, or by laying-off workers.
Long-term growth depends on being able to recruit
sufficient suitable staff.
Labour intensive processes are more likely to be seen in
Job production and in smaller-scale enterprises.

Advantage

Disadvantage

Employment Creation

Lack of Technological

Social Justice.
Low Capital

Requirement
Local Resource
Utilization

Development
High Cost
Time Consuming
Inability to Handle
Complexity
Poor Capital
Formation

Capital Intensive Projects

Capital refers to the equipment, machinery, vehicles and so on

that a business uses to make its product or service.

Capital-intensive processes are those that require a relatively
high level of capital investment compared to the labour cost.
These processes are more likely to be highly automated and to
be used to produce on a large scale.
Capital-intensive production is more likely to be associated with
flow production (see below) but any kind of production might
require expensive equipment.
Capital is a long-term investment for most businesses, and the
costs of financing, maintaining and depreciating this equipment
represents a substantial overhead.
In order to maximise efficiency, firms want their capital
investment to be fully utilised (see notes on capacity utilisation).
In a capital-intensive process, it can be costly and timeconsuming to increase or decrease the scale of production.

Advantage

Disadvantage

Resource Utilization

Human Aspect

Better Quality

Ignored
Decreases
Employment
Costly Technology

Complexity

Management
Scale of Production

Indigenous Projects
The project which is funded from local sources is

known as Indigenous Projects.

It is based on locally available materials,
technology and labour.
It is generally of small size and uses appropriate
technology available indigenously.
Example:

Textile
Paper
Architecture
Pottery

Advantage

Disadvantage

Labour Intensive.

Technical Retardation

Local Resources

Rigidity

Utilization
Cultural Protection

Limited Application