Site Preparation Contractors (U.S.)

NAICS 2022 code 23891 — a NAICS "industry" (the five-digit level). NAICS is the North American Industry Classification System, the standard the U.S. government uses to group businesses. This page is a short rollup; the full detail lives one level down in 238910.

1. Overview

Site preparation is the first trade on almost every construction project. Before a foundation is poured, someone has to clear the land, tear down what was there, move and grade the dirt, dig the trenches, and get water off the site. These contractors turn raw or previously used land into build-ready sites for homebuilders, general contractors, manufacturers, data-center developers, utilities, transportation agencies, and municipalities.[1] The work is essential, equipment-heavy, cyclical, and intensely local.

At this five-digit level, NAICS 23891 is a pure pass-through: it contains exactly one child industry — 238910, Site Preparation Contractors — and nothing else. So the industry equals its child. This page gives the rollup's own federal figures and points you to the 238910 primer for the full treatment; everything in the sections below is a compressed version of what appears there.

Why it matters to an investor: this is a large industry riding two powerful tailwinds — the artificial-intelligence-driven (AI, computer systems that learn and generate) data-center build-out and the reshoring of U.S. manufacturing — while remaining one of the most fragmented industries in the whole economy. Public-market exposure is indirect (dirt work is buried inside larger diversified builders); private investment is often more direct (own a regional firm, back a roll-up, finance equipment). Both routes are in Section 10 and, in full, in the 238910 primer.

2. What's inside — and why this level equals its one child

NAICS assigns each five-digit "industry" one or more six-digit "national industries." NAICS 23891 has a single one:

Because there is only one child, the five-digit rollup and the six-digit industry are the same thing — the same scope, the same firms, the same federal statistics. NAICS keeps the extra digit purely so the coding system stays uniform; it does not add a new sub-category here.

Scope (unchanged from the child). Excavating and grading, land clearing and earthmoving, building and structure demolition, foundation drilling, trenching, dewatering, soil compaction, and septic-system installation. It also includes renting construction equipment with an operator (except cranes). It excludes road and bridge building (NAICS 237310), water/sewer/utility lines (NAICS 2371), land subdivision (237210), poured concrete foundations (238110), and equipment rental without an operator (532412).[1] For the full inclusion/exclusion list, see 238910.

3. Size (this level's rollup figures)

These are the ground-truth federal statistics for NAICS 23891 from our dataset. Because the level equals its one child, they are identical to 238910's. County Business Patterns (CBP) figures are 2023; receipts and concentration are from the 2022 Economic Census.

Least-concentrated industry. The four largest firms take just 2.2% of revenue (the "CR4," or four-firm concentration ratio); the top 8, 3.8%; the top 20, 7.3%; the top 50, 12.3%.[3] The Herfindahl-Hirschman Index (HHI, a 0–10,000 concentration score where anything under 1,500 is "unconcentrated") is 3.8 — essentially zero.[3]

Undercount caveat. The employer figures above understate the true operator count. CBP excludes the self-employed, businesses without an Employer Identification Number (EIN), and EIN holders with no employees.[5] Site prep has low barriers at the small end — one operator and one machine can bid a residential lot — so it has a long tail of nonemployer sole proprietors tabulated separately in the Census Bureau's Nonemployer Statistics.[6] Our dataset has no nonemployer count for this code, so we flag the direction of the bias (undercounted) without inventing a number. The federal receipts figure of $158.7 billion[3] is the anchor to trust; private market-research estimates range widely by how they draw the boundary.

4. Investable universe (where value concentrates)

With one child, all of this level's investable value sits in the same place the 238910 primer describes. There is no clean public pure play — dirt work is almost always one segment inside a bigger construction company, so an investor analyzes the relevant segment, not the whole firm. The closest listed proxy is Sterling Infrastructure, whose E-Infrastructure segment is large-scale site development for data centers and factories and which owns Plateau Excavation. Other partial exposures include Granite Construction, Construction Partners, MasTec, Tutor Perini, and Primoris Services; Great Lakes Dredge & Dock is the listed marine-earthmoving cousin.[9][10][11] "Picks-and-shovels" plays are the equipment makers (Caterpillar, Deere) and rental firms (United Rentals, Herc) that sell into the whole fragmented contractor base. The heart of the industry, though, is private — family- and employee-owned firms such as H&K Group, Kokosing, Kiewit, and PCL, plus thousands of regional operators. Tickers and multiples are in Section 10 and, in detail, the 238910 primer.

5. How the money works

Site-prep owners make money by winning bids and keeping their equipment busy. Most work is won competitively on fixed-price (lump-sum) or unit-price bids — so much per cubic yard moved, per linear foot trenched, per acre cleared — so the estimate is the business. Gross margins typically run 18–28% on site work and thinner on mass heavy-civil jobs; net margins for independent excavators commonly land in the mid-single digits to low-teens, while scaled players doing complex data-center sites earn more (Sterling's E-Infrastructure adjusted operating margins reached near 25% in 2025).[9][7] Equipment utilization is the profit lever — an idle owned machine costs more per day than it bills. Backlog (signed but not-yet-built work) is the forward gauge, and "differing site conditions" (unexpected rock, groundwater, buried debris) trigger change orders that can rescue or wreck a job. Cash is less smooth than revenue because of upfront mobilization costs and retainage (money the owner holds back until completion).[11] The full economics are in the 238910 primer.

6. Demand drivers

Site prep is a derived-demand, first-in trade: it tracks how much construction is starting, magnified by site size.

• Data centers — the dominant current driver. The AI build-out is generating enormous earthwork on compressed schedules; U.S. data-center construction was running near a $45 billion annual rate in late 2025.[18]
• Reshoring megaprojects. Semiconductor fabs (spurred by the CHIPS Act, the 2022 chip-manufacturing subsidy law) and electric-vehicle battery plants are massive site jobs.[21]
• Public infrastructure. The Infrastructure Investment and Jobs Act (IIJA, the 2021 law) authorized about $1.2 trillion, feeding roadway and utility grading; 2026 is its final authorized year, with a "funding cliff" risk after.[19][20]
• Housing and commercial starts. Subdivisions, multifamily, and warehouses all begin with dirt work, making the industry sensitive to interest rates.

7. Regulation

Site prep is where a project first touches the environment and where some of the most dangerous construction work happens, so it is regulated at the project level. The Occupational Safety and Health Administration (OSHA) regulates trenching under 29 CFR (Code of Federal Regulations) 1926 Subpart P — cave-ins are the leading cause of trenching fatalities, and protective systems are required at five feet or deeper.[14] Work disturbing one acre or more needs coverage under the U.S. Environmental Protection Agency's (EPA) Construction General Permit, part of the National Pollutant Discharge Elimination System (NPDES), with a Stormwater Pollution Prevention Plan (SWPPP).[12] Wetlands work can require a Clean Water Act Section 404 permit from the U.S. Army Corps of Engineers,[13] and the Davis-Bacon Act sets prevailing wages on covered federal work.[15] Local grading permits, licensing, bonding, and dust and haul-route rules add cost and schedule risk. The investment consequence is schedule and cost uncertainty on fixed-price contracts. Full detail is in the 238910 primer.

8. Consolidation

Extreme fragmentation is the defining feature — a four-firm revenue share of 2.2% and an HHI near zero.[3] At the small end, barriers to entry are low; at the top, megaproject work demands large fleets, rapid mobilization, and bonding capacity that small firms cannot muster. Consolidation is accelerating: private equity (PE — firms that buy companies) is "rolling up" small contractors into regional platforms, and construction-services mergers and acquisitions (M&A) ran to hundreds of deals in 2025.[16][17] The marquee public example is Sterling's roughly $400 million acquisition of Plateau Excavation.[10] Expect the top of the market to keep concentrating while the long tail stays fragmented.

9. Risks

• Cyclicality. Demand falls with the construction cycle and interest rates; a downturn idles fleets and compresses bid margins fast.
• Fixed-price losses. Underpricing, or hitting unforeseen rock, groundwater, contamination, or weather, falls on the contractor.
• Theme concentration. The current boom leans on a handful of hyperscale data-center buyers; a pullback in AI capital spending would hit the fastest-growing segment hardest.
• Labor scarcity and capital intensity. Skilled operators are hard to replace, and heavy equipment ties up cash when utilization drops.
• Working capital, bonding, and input-cost inflation. Retainage and slow pay create liquidity pressure; limited surety capacity caps bidding; diesel, steel, and cement can move faster than fixed contract prices.[11]
• Policy cliffs. IIJA funding runs through 2026 and the CHIPS construction tax-credit deadline is end-2026 — both could soften demand afterward.[20][21]

10. How to invest and outlook

Public routes. The cleanest exposure is Sterling Infrastructure (STRL, Nasdaq), though the stock has re-rated dramatically on the data-center theme, so its multiples now price in a lot of growth. Granite Construction (GVA) and Construction Partners (ROAD) offer broader blends of sitework, civil construction, and materials; MasTec (MTZ), Tutor Perini (TPC), and Primoris Services (PRIM) give partial, diversified exposure; Great Lakes Dredge & Dock (GLDD, Nasdaq) is the listed marine specialist. The equipment makers and rental firms (Caterpillar, Deere, United Rentals, Herc) are a less company-specific bet. The key is to value the relevant segment, not headline revenue.

Private routes. This is where the industry lives — own or acquire a regional excavation firm (small firms trade around low-to-mid single-digit multiples of earnings before interest, taxes, depreciation, and amortization (EBITDA)),[11] back a roll-up, or finance equipment. Underwrite normalized owner pay, maintenance capital expenditure, working capital, backlog quality, claims, permits, safety history, bonding, and customer concentration, and keep leverage conservative.

Outlook. The long-term setup is constructive: land must be prepared before anything is built. The near-term setup is unusually strong at the scaled end thanks to AI data centers and reshoring, with richer margins on complex mission-critical sites. Public infrastructure spending should peak in 2026 as the IIJA runs its final authorized year.[20] Watch what happens after the 2026 policy cliffs, the durability of AI capital spending, and interest-rate-sensitive housing. For the full company-by-company breakdown, valuation checklist, and private-diligence guide, see the 238910 Site Preparation Contractors primer.

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Sources

1. U.S. Census Bureau. 2022 NAICS: 238910 Site Preparation Contractors (definition). 2022. https://www.census.gov/naics/?details=238910&input=238910&year=2022
2. U.S. Census Bureau. County Business Patterns: 2023 (NAICS 238910). 2025. https://www.census.gov/data/datasets/2023/econ/cbp/2023-cbp.html
3. U.S. Census Bureau. 2022 Economic Census — Concentration of Largest Firms and receipts, NAICS 238910. 2025. https://api.census.gov/data/2022/ecnsize/groups/EC2200SIZECONCEN.html
4. U.S. Small Business Administration. Table of Small Business Size Standards (NAICS 238910). 2023. https://www.sba.gov/document/support-table-size-standards
5. U.S. Census Bureau. County Business Patterns Methodology. 2026. https://www.census.gov/programs-surveys/cbp/technical-documentation/methodology.html
6. U.S. Census Bureau. Nonemployer Statistics. 2025. https://www.census.gov/programs-surveys/nonemployer-statistics.html
7. Sterling Infrastructure, Inc. Sterling Reports Strong Fourth Quarter and Full Year 2025 Results and Issues Full Year 2026 Guidance. 2026. https://www.strlco.com/news/sterling-reports-strong-fourth-quarter-and-full-year-2025-results-and-issues-full-year-2026-guidance/
8. Sterling Infrastructure, Inc. Sterling Completes Acquisition of Plateau Excavation, Inc. 2020. https://www.strlco.com/news/sterling-construction-completes-acquisition-of-plateau-excavation-inc-and-enters-into-new-credit-agreement/
9. Granite Construction, Inc. 2025 Annual Report (Form 10-K). 2026. https://www.sec.gov/Archives/edgar/data/861459/000086145926000014/a2025annualreport.htm
10. The Construction CFO. Excavation Contractor Net Profit Margin. 2025. https://constructioncfo.net/excavation-contractor-net-profit-margin
11. CT Acquisitions. Excavation Business Valuation: 2026 Multiples by Segment. 2026. https://ctacquisitions.com/guides/excavation-business-valuation/
12. U.S. Environmental Protection Agency. Stormwater Discharges from Construction Activities (Construction General Permit / SWPPP). 2026. https://www.epa.gov/npdes/stormwater-discharges-construction-activities
13. U.S. Environmental Protection Agency. Permit Program under Clean Water Act Section 404. 2026. https://www.epa.gov/cwa-404/permit-program-under-cwa-section-404
14. U.S. Occupational Safety and Health Administration. Trenching and Excavation — Construction (29 CFR 1926 Subpart P). 2026. https://www.osha.gov/trenching-excavation/construction
15. U.S. Department of Labor. Fact Sheet #66: The Davis-Bacon and Related Acts. 2023. https://www.dol.gov/agencies/whd/fact-sheets/66-dbra
16. Construction Dive. Why private equity's rollup of construction firms increases project risk. 2025. https://www.constructiondive.com/news/private-equity-risk-construction-affiliated-contractors/822534/
17. Capstone Partners. Construction Services M&A Update. 2025. https://www.capstonepartners.com/insights/article-construction-ma-update/
18. Construction Dive. Data center construction rolls into 2026. 2026. https://www.constructiondive.com/news/data-center-construction-rolls-into-2026/808636/
19. Federal Highway Administration. Bipartisan Infrastructure Law Overview. 2022. https://www.fhwa.dot.gov/bipartisan-infrastructure-law/docs/BIL_overview_update_2022-11-8b.pdf
20. The Bond Buyer. Transportation infrastructure rides into final year of IIJA with record spending expected. 2026. https://www.bondbuyer.com/news/transportation-infrastructure-rides-into-final-year-of-iija-with-record-spending-expected
21. Congressional Research Service. Semiconductor Fabrication Facilities Funded by the CHIPS Act: Project Status. 2025. https://www.everycrsreport.com/reports/R49031.html