Before You Hire a Fractional CFO, Ask Yourself This Question
The fractional CFO model has exploded in construction over the last few years, and honestly, I get it. The pitch is compelling: you get senior financial leadership—someone who can build forecasts, analyze project margins, advise on bonding capacity, optimize your capital structure—without paying a full-time executive salary. For a contractor doing $10M, $20M, maybe $50M in revenue, that sounds like exactly the kind of leverage you need.
And many fractional CFOs are genuinely talented. They understand construction finance, they've seen a lot of businesses, and they know what good looks like. The problem isn't their capability. The problem is what they walk into.
Here's the uncomfortable question nobody asks before signing the engagement letter: Is the underlying data actually there?
In most construction companies, the answer is no. Or at least, not in a form that's useful.
I've talked to enough contractors to know how this plays out. The books are maintained—someone is categorizing transactions, the bank reconciles, taxes get filed. But the job costing is a mess or an afterthought. Costs aren't hitting the right jobs consistently. Labor burden isn't being allocated. Change orders are floating in limbo and nobody's sure which ones are approved or where they sit in the billing. The WIP schedule, if it exists, is getting thrown together right before the bonding company asks for it rather than being a living management tool. Revenue is being recognized on a cash basis or by invoice date rather than percentage of completion.
A fractional CFO can't fix any of that. That's not what they're there for, and frankly, it's not what you're paying them to do. What you end up with is a highly capable person trying to advise a business using data that doesn't mean what it appears to mean. They can build a beautiful cash flow forecast on top of numbers that don't reflect reality, and now you have a beautiful forecast that isn't useful.
This isn't a knock on fractional CFOs. It's a sequencing problem.
What a controller actually does—and why it matters first
A controller is an operational role. Their job is to make sure the financial infrastructure of the business is functioning correctly day in and day out. In construction, that means job costs are being coded right and reviewed against estimates. It means billings go out on time, retainage is tracked, and the aging report actually reflects what's outstanding. It means payroll is hitting the right cost codes. It means the WIP schedule is being maintained monthly—or more often—as a real management tool, not a compliance exercise.
None of that is glamorous. But all of it is foundational.
When a controller is doing their job well, something happens that's easy to underestimate: management actually starts trusting the numbers. Owners stop running the business on gut feel and cash in the bank because they have information they believe in. Project managers start caring about job costing because they see it reflected in reporting that affects real decisions. The financial data starts telling the actual story of the business.
That's the environment where a fractional CFO can do what they're actually good at. If the WIP is accurate, a CFO can look at it and identify which job types are consistently underperforming. If job costs are coded correctly, they can analyze labor efficiency by crew or superintendent. If the balance sheet is clean, they can have a real conversation about leverage and bonding capacity and what growth actually costs the business.
In other words, the fractional CFO's value is a multiplier on the quality of your data. And you can't multiply nothing.
The sequence that actually works
If you're a contractor in growth mode who feels like you need senior financial leadership, here's the order of operations I'd suggest:
Get the controller function right first. Whether that's hiring someone directly, bringing in a part-time controller, or working with a firm that provides that function—make sure someone owns the operational integrity of your financials. That person should understand construction accounting specifically. Generic bookkeeping or accounting doesn't cut it here here. WIP accounting, percentage of completion, job costing, retainage, AIA billing—these aren't concepts a general accountant picks up overnight.
Once that foundation is solid and you've been running clean for a few months, then bring in fractional CFO support. At that point, the engagement can actually deliver on what the pitch promised. You'll have data that supports real analysis. You'll be able to have conversations about strategy, not just scrambling to figure out why the numbers don't add up.
Why this keeps happening
The fractional CFO is easier to sell. Strategic financial leadership sounds more exciting than someone making sure costs hit the right job codes every week. Owners want the high-level advisor; they don't realize that the advisor has nothing to work with until they're already three months into an engagement that isn't producing the insights they expected.
The controller function also tends to get undervalued in construction. It's viewed as administrative overhead rather than as the system that makes financial decision-making possible. But in a project-based business where every job is essentially its own profit center, the controller is the person keeping score. Without accurate scorekeeping, you don't actually know how you're doing—you just think you do.
Get the foundation right first. Build the data infrastructure. Then bring in the strategic firepower to do something with it.
The fractional CFO model works. It just doesn't work first.