What Is a Fractional CFO for Construction?
The fractional CFO model has become the secret weapon for mid-sized contractors. You get the strategic financial leadership of a $250K executive for $3K-$8K per month. It's not "budget CFO service" — it's right-sized CFO expertise for companies that need strategic thinking a few days per month, not 40 hours per week.
Why This Matters
Most contractors in the $5M-$30M range face a painful dilemma: they're too small to justify a full-time CFO salary but too large to operate without CFO-level thinking. A fractional CFO solves this problem by providing strategic financial leadership on a part-time, outsourced basis.
The economics are compelling. A full-time CFO costs $200K-$350K in salary plus benefits, equity, and overhead — call it $300K all-in. A fractional CFO delivering 2-4 days per month costs $40K-$100K annually. You get 80% of the value at 25% of the cost.
What "Fractional" Actually Means
A fractional CFO is an experienced financial executive who works with multiple companies simultaneously, providing each client with CFO-level strategic support without the full-time commitment.
Typical engagement structure:
- Time commitment: 2-4 days per month (16-32 hours)
- Fee range: $3,000-$8,000 per month depending on complexity and company size
- Contract term: Usually 6-12 month initial engagement, then month-to-month
- Deliverables: Monthly financial review, quarterly strategic planning, ongoing advisory on major decisions
This isn't a remote bookkeeper who's "available for questions." A fractional CFO is in your business regularly enough to understand your strategy, know your projects, maintain relationships with your banker and surety, and provide real strategic guidance.
What a Fractional CFO Does
Core monthly activities:
- Review and interpret WIP reports, identifying margin fade, billing opportunities, and cost overruns
- Build and maintain 13-week rolling cash forecasts
- Analyze project profitability across your portfolio
- Monitor key financial metrics (cash conversion cycle, working capital, EBITDA)
- Prepare materials for banking and bonding relationships
Strategic advisory:
- Evaluate bid opportunities and pricing strategy
- Advise on major purchases (equipment, facilities, technology)
- Optimize capital structure and debt management
- Develop growth plans aligned with bonding capacity
- Guide decisions on hiring, expansion, and resource allocation
Relationship management:
- Maintain proactive communication with your bank
- Work with your surety to maximize bonding capacity
- Coordinate with your CPA on tax planning and year-end preparation
- Interface with potential investors or buyers if you're considering a transaction
What a Fractional CFO Does NOT Do
They don't replace your bookkeeper or controller. A fractional CFO is strategic, not operational. They're not:
- Entering transactions or reconciling accounts
- Processing payroll or AP/AR
- Preparing day-to-day financial reports
- Managing job costing on a daily basis
Think of it this way: your bookkeeper records history, your controller organizes and reports it, and your fractional CFO interprets it and guides decisions based on it.
Cost Comparison: The Real Numbers
Full-time CFO:
- Salary: $200K-$350K depending on market and experience
- Benefits (health, 401k, etc.): $40K-$70K
- Office, technology, support: $10K-$20K
- Total annual cost: $250K-$440K
Fractional CFO:
- Monthly fee: $3K-$8K depending on engagement size
- Total annual cost: $36K-$96K
For most contractors under $30M, you simply don't need 40 hours per week of CFO-level thinking. You need 2-3 days per month of strategic financial work, which is exactly what the fractional model provides.
When to Use Fractional vs. Full-Time
Fractional CFO makes sense when:
- Revenue is between $5M and $50M
- You need strategic guidance but not daily execution
- Your controller or bookkeeper handles operational accounting competently
- You're growing but cash flow is manageable
- You're not in crisis mode requiring daily attention
Full-time CFO makes sense when:
- Revenue exceeds $50M with complex multi-office operations
- You're raising institutional capital or preparing for sale
- You're managing significant debt covenants requiring constant monitoring
- You have multiple divisions or business units requiring dedicated financial leadership
- Your industry or contracts require daily CFO-level involvement (large federal contracts, joint ventures, etc.)
Red Flags in Choosing a Fractional CFO
Not all fractional CFOs are created equal. Here's what to avoid:
No construction experience. Construction finance is fundamentally different from other industries. WIP accounting, bonding relationships, retention, and project-based cash flow require specific expertise. A fractional CFO from SaaS or manufacturing won't cut it.
Too many clients. If they're working with 15+ companies, they don't have the bandwidth to truly understand your business. Look for someone managing 6-10 clients max.
No local presence. While remote work is normal, your CFO should be in your office at least quarterly. Banking and surety relationships require face-to-face interaction. If they've never met your banker or seen your projects, they can't provide full value.
Only offering monthly reporting. If all they do is reformat your P&L and send it with a few comments, that's not CFO work — that's glorified bookkeeping. Real fractional CFOs drive strategy, not just report results.
The Bottom Line
A fractional CFO is the right fit for most contractors in growth mode who need strategic financial leadership without the overhead of a full-time executive. You get experienced guidance on cash forecasting, bonding optimization, growth planning, and major decisions — exactly when you need it, without paying for time you don't need.
The key is finding someone with deep construction finance experience who has the bandwidth to truly understand your business. When you find the right fit, a fractional CFO typically pays for themselves within the first quarter through improved cash management, better bonding terms, or strategic decisions that avoid expensive mistakes.
If you're at the stage where you're making six-figure decisions based on gut feel, spending 10+ hours per week on financial strategy yourself, or feeling limited by bonding capacity, a fractional CFO is likely the most cost-effective solution. You don't need someone full-time. You need someone who knows what they're doing when it matters.