Site Preparation Contractors
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Industry Overview
The site preparation contractor industry includes over 30,000 businesses with combined annual revenue of $37 billion. Major companies include units of Jacobs Engineering Group, URS Corporation, and Granite Construction, and giants Bechtel and Fluor. Most firms are privately owned. The industry is fragmented: over 75 percent of businesses are small, with fewer than 10 employees. In addition to corporations of various sizes, many independent site prep contractors operate as sole practitioners, without incorporation or permanent employees.
Competitive Landscape
Construction and demolition projects drive demand for site prep contractors. The profitability of individual companies depends on accurate bidding and optimal deployment of personnel and equipment. Large companies have advantages in servicing multiple types of projects simultaneously. Small companies can compete effectively by subcontracting their services to larger firms, specializing by type of work, or becoming a preferred contractor for local builders and developers. Average annual revenue per employee for a typical company is a low $130,000, because the work is labor-intensive.
Small firms often compete with solo owner-operators who hire temporary workers and rent equipment as needed.
Products, Operations & Technology
Major services are land clearing and excavation, preparation for construction, and demolition. Excavation services account for 60 percent of industry business, heavy construction for 30 percent, and wrecking and demolition, 8 percent. Other services include preparing for water, sewer, and pipeline construction, and support for oil, gas, and mining operations.
Most firms specialize in preparation work for buildings or infrastructure projects. Constructing buildings represents about 50 percent of site prep work. Infrastructure projects include highways, sewer and water mains and facilities, and driveways.
Contractors use wrecking equipment to demolish buildings and structures, and a variety of earthmoving equipment for excavation and land grading. Specialty contractors install septic systems, move houses, or rent equipment with operators. Companies win jobs through a bidding process, either on a per-hour or fixed-price basis. Firms often work as subcontractors, which accounts for about half of industry revenue.
For large projects, surveyors measure site elevations and engineers determine how best to do the work. Contractors acquire local construction permits as needed on a per-job basis. Firms transport equipment to the job site using trailers, flatbed carriers, or tractor-trailers.
Machine operators, manual laborers, and supervisors work on the job site. Typical functions include bulldozing to clear and grade land, digging or drilling to prepare for foundations, and wrecking or blasting for demolition. Workers prepare waste, such as dirt, rock, felled trees, and demolition debris, which may contain hazardous materials, for removal and hauling according to local ordinances.
Larger firms may work anywhere in the country or internationally, and typically manage multiple types of projects in multiple locations simultaneously. Midsize firms may work regionally, as well as locally, whereas smaller firms usually operate within a radius of less than 30 miles.
Equipment includes bobcats, backhoes, bulldozers, excavators, scrapers, graders, and loaders for putting debris into trucks for hauling. Major earthmoving equipment manufacturers are Caterpillar, Komatsu, and CNH Global. A small bulldozer costs around $15,000 and runs six hours on a tank of gas. Depending on the machine, purchase prices can vary by 4 to 10 percent during a year, while operational costs can vary greatly due to changes in gas prices. Smaller companies may rent machinery from sources like United Rentals and NationsRent.
Site prep machinery is incorporating more technology, including computerized sensors and controls, that enable the operator to work more efficiently. Sophisticated machines with GPS help in grading and leveling. Office technology includes software for project planning and management, site elevation schematics, billing, and receivables. Some smaller firms may prefer traditional manual processes for project plans and management, but use standard accounting and billing software.