The short answer...
excavation gets you to grade, over-excavation gets you below grade and is based on engineering requirements.
The longer answer...
In grading work there may be times when plans specify to cut or excavate to a particular elevation. There are other times when an over-excavation will be specified to remove unsuitable soils to a certain depth. So lets say that you are at a site where the native elevation is at 460' and plans call for finished grade at an elevation of 450' with an over-excavation of 5.' What this means is that you would excavate down 10' (from 460' to 450') and then over-excavate down an additional 5' (from 450' to 445')
At that point the bottom of the over-excavated location will usually have x number of inches to be scarified, moisture conditioned and compacted to a certain percentage of the maximum dry density obtained in laboratory testing. The removed soil (aka: over-ex or OX) will then be replaced with suitable material in lifts of a specified thickness with an optimum moisture content and compacted to a particular percentage of the maximum dry density.
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