Ants are millimetres in scale yet collectively create metre-scale nests in diverse substrates. To discover principles by which ant collectives self-organize to excavate crowded, narrow tunnels, we studied incipient excavation in small groups of fire ants in quasi-two-dimensional arenas. Excavation rates displayed three stages: initially excavation occurred at a constant rate, followed by a rapid decay, and finally a slower decay scaling in time as
t
−1/2
. We used a cellular automata model to understand such scaling and motivate how rate modulation emerges without global control. In the model, ants estimated their collision frequency with other ants, but otherwise did not communicate. To capture early excavation rates, we introduced the concept of ‘agitation’—a tendency of individuals to avoid rest if collisions are frequent. The model reproduced the observed multi-stage excavation dynamics; analysis revealed how parameters affected features of multi-stage progression. Moreover, a scaling argument without ant–ant interactions captures tunnel growth power-law at long times. Our study demonstrates how individual ants may use local collisional cues to achieve functional global self-organization. Such contact-based decisions could be leveraged by other living and non-living collectives to perform tasks in confined and crowded environments.