Developing An Intranet Internally
This is a time-honored and trusted approach that makes sense when there are strong internet designers and developers in an organization. The development team typically knows the company and its processes better than any outside contractor and can create a new system that specifically solves existing problems instead of just customizing an existing system for another client.
On the other side of this approach is the "not being able to see the forest for the trees" syndrome where a development team can be too focused on the details to see the bigger picture. Also worth considering is whether the internal resources are actually internet developers or just IT staff who are sure they can create an intranet if they're given a chance. Be wary of these situations.
While there is no license cost for using your own technology, there are some drawbacks to developing a proprietary code base for your intranet. Unlike commercial products or software developed by the open source community, nobody else will be working on potential updates for you. If you want to add a new feature, your only option will likely be to have internal or external developers create it for you. That is not to say you cannot use open source components or purchase third-party tools that will allow you to extend your Intranet, but integrating these components with your existing system can be very difficult if extensibility was not considered during initial development.