The Excavation Site is a great encounter in principle, but it's let down by the fact that your players will never come here.
The encounter features three goblins excavating a room for treasure. They have dug a deep pit, and then bridged portions of the pit with rickety wooden planks. Players triggering the encounter will face a two-level fight against the goblins and their guard drakes while struggling to stay balanced on the planks. It's a great tactical set-up. (In typical Keep fashion, there's no mention of what the goblins are digging for, other than "treasure" which they "doubt they will ever find".)
This location is tucked away in a dead end to the east of the Goblin Guard Room. You can come to it in one of three ways. First, you can head east immediately upon entering the dungeon, which, although possible, doesn't happen. Secondly, you can discover it at a later stage in the course of attempting to completely map the dungeon (more of which later). And thirdly, you notice it while chasing Balgron the Fat from his bedroom to the cave complex.
It works reasonably well if the players come to it straight up; this seems to be how it was designed. However, if it's reached after the conclusion of the Chieftain's Lair encounter, it's anti-climactic. These random goblin goons trivialise the players' early struggles. (The module seems to know this, as it calls it "Encounter Three" and places its page before the page for the Chieftain's Lair.) I opted for having these goblins surrender when my players came on them, but it's a shame that this otherwise decent scenario couldn't have been placed more squarely on the main storyline.
The forgotten-corner setting of this encounter, and the rather senseless "excavation", suggest that this encounter was not originally intended to be placed here, and may in fact have been created for another adventure altogether. It really makes no sense for this digging to be occurring, considering that the goblins know what is underneath this room - the second level of the dungeon! Which they can walk to perfectly safely, if they are so inclined, without structurally weakening the entire dungeon.
As far as game design goes, the lesson here is if you have a really great set-up for an encounter, (1) it doesn't have to make sense as long as it's fun, and (2) if you genuinely think it's fun, put it where your players will find it, not tucked away in an optional dead-end.