Site Prep Contractors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 37,300 site preparation contractors in the US prepare land for construction activity. Services include excavation work; wrecking and demolition; trenching; sewer and water main installation; construction machinery rental (with operator); and road construction. While private sector projects account for the majority of revenue, site prep contractors also provide services to federal, state, and local governments.
Dependence On General Contractors
Because site preparation is just part of the construction process, companies often depend on general contractors to secure client business.
Seasonal And Weather-Related Factors
Seasonality and weather conditions affect project timelines and site prep contractors’ ability to perform work.
Industry size & Structure
The average site preparation contractor operates out of a single location, employs 9-10 workers, and generates about $2-3 million annually.
- The site preparation services industry consists of about 37,300 companies that employ 379,600 workers and generate about $97 billion annually.
- The industry is fragmented; most site preparation contractors serve a limited geographical market.
- Some large general contractors, such as Granite Construction and Sterling Construction, offer site preparation services in addition to other construction services.
Industry Forecast
Site Prep Contractors Industry Growth
Recent Developments
Apr 16, 2024 - Industry Growth Poised for Rebound
- The site prep contracting industry is expected to see tepid sales growth this year, but demand is projected to improve in the following four years. The industry’s year-over-year sales increased by 7.5% in 2022 before dropping to 2.4% in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Sales growth is projected to moderate further to 2% in 2024, then rise by 6.4% in 2025. The industry will then see steady average annual growth of about 6.3% through 2028, according to Inforum and the Interindustry Economic Research Fund, Inc.
- Home builder confidence was unchanged in April as mortgage rates and inflation remained elevated, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), was flat at 51 in April 2024, which marked the breaking of a four-month streak of HMI increases. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The NAHB said that while hotter-than-expected inflation data have given some potential buyers pause, the trade group continues to expect the Federal Reserve to announce future rate cuts before the end of the year, which will lead to moderating mortgage rates in the second half of 2024.
- Consumer prices, a leading indicator of inflation, came in hotter than expected for March, which could push mortgage rates higher, according to the National Association of Realtors (NAR). Bureau of Labor Statistics data show that the consumer price index (CPI) rose to 3.5% in March. The Federal Reserve has indicated that it won’t reduce the short-term benchmark interest rate until the CPI drops to the Fed’s target of 2%. NAR Chief Economist Lawrence Yan said, “March inflation figures were very bad, which also means bad news for interest rates. Mortgage rates, unfortunately, will move a notch higher and are likely to cross above 7% in the upcoming weeks.” High mortgage rates have put downward pressure on housing demand, which could reduce single-family construction activity.
- North American construction and engineering spending in 2024 is expected to grow by about 5%, down from 7% growth in 2023, according to FMI’s second-quarter 2024 North American Engineering and Construction Outlook. Slower spending for residential and some other private sector construction segments will reduce overall construction and engineering spending. Construction subsectors that are expected to see double-digit growth in 2024 include manufacturing (up 19% in 2024 over 2023), lodging (+14%), public safety (+12%), highway and street (+10), and sewage and waste disposal (+10). Other pockets of steady growth include educational, conservation and development, water supply, and healthcare. High interest rates continue to put downward pressure on residential and commercial projects. Single-family construction spending is forecast to be flat in 2024 after falling 14% in 2023. Spending for multifamily is expected to decline 8% in 2024 after projects in development peaked at 1 million units in mid-2023. With a year-over-year decline of 2%, commercial is the only nonresidential building construction segment projected to post negative spending growth in 2024.
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