Construction Finance Manager Role & Responsibilities

Construction finance managers are experts on unique billing practices, cash flow issues and other financial challenges not found in other industries. Job costing, retainage, progress payments, overbilling and other construction-specific situations create a steep learning curve even for financial experts with decades of experience in other sectors. 

While construction companies will often have a finance department whose members are responsible for the business overall — including accounting, capital planning, etc — most of the day-to-day financial responsibilities on a construction project are actually handled by the project manager.

In this article, we’ll explore the role of a finance manager in construction — and the responsibilities of other team members that together help craft the financial success of a construction company.

Construction Finance Manager: Leading the Way

A construction finance manager (CFM) is the company representative for financial matters. They monitor and report on financial data and make key decisions to ensure accurate financial statements for construction companies. They are often in charge of accounting personnel if the company has an internal accounting department. Managers for smaller companies may also participate in the day-to-day accounting responsibilities.

A construction finance manager reports to company management (CFO, CEO, or owner) and works with employees in the accounting department, including credit managers, project managers and other departments as needed. If a company doesn’t have a CFM, they may use an office manager, staff accountant or accounting manager to fill this role. 

Smaller companies that can’t justify a full-time position may also hire a part-time or temporary CFO, called a fractional CFO, to help them with a temporary project such as capital raising or an audit.

Financial Management Roles in Construction

Financial management means efficiently planning and directing a company’s financial resources. As in any industry, a wide variety of people in any construction business are responsible for managing those resources. 

However, one of the key aspects of the building industry that sets it apart — particularly when it comes to financial management and performance — is that construction is project-based. 

While large construction companies may employ a financial manager who looks at company-wide financial performance, most of the key day-to-day financial activities are performed by project managers. 

Most of a construction company’s financial resources are deployed where they will make money: on the jobsite. As a result, Project Managers serve as the primary stewards of these resources. 

Finance Roles in Construction

Within a construction firm, no single person is responsible for financial activity or performance tracking. While many of the activities, reports, and decision-making authority often fall under the purview of a finance manager, employees in other roles play a critical part in the day-to-day financial operations. 

The Project Manager: On the Front Line of Financial Management

In most construction companies, the project manager (PM) is responsible for financial management of their own project or group of projects. 

Communication Between PMs and Finance Managers

While the PM handles finances for their specific project, they also work closely with the company’s finance manager to monitor and track progress. 

This cross-team communication can occur on a daily basis, and even in real-time as challenges arise. Here is an example of a typical exchange between project managers and financial managers:

1. The PM submits daily or weekly reports on project financials and costs to the accounting team comparing budgeted and actual costs. If the company uses project financial software these reports can often be automated.  
2. The finance manager provides the PM with updated financial forecasts based on current data, and notifies the PM of potential issues or cost overruns.
3. The PM reports summary rollups of their project financials to a senior PM or project executive overseeing their work.
4. Project executives aggregate reports across their portfolio of projects for discussion with the company CFO or owner on company-wide financial performance and cash flow.

A Single Source of Truth for Financial Management

Neither construction finance managers nor project managers work in a vacuum. Financial problems on one jobsite – a missed subcontractor payment or account overdraft – can quickly ripple throughout a company’s entire suite of active projects, and even their backlog. 

Both need access to a single source of financial information. Project management software that integrates with the company’s accounting systems to provide real-time data updates enables financial managers and project managers alike to react quickly in the event of cash flow shortages, payment delays or cost overruns. 

Communication is key in financial management.

Close collaboration with open communication channels across roles is key for construction firms. It allows real-time sharing of financial changes and issues to make quick decisions. Siloed data collection or communication delays between departments increases financial risk for the company, reducing the reaction time to critical cash flow issues on one project that could cause performance issues on other jobs.

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