Fraser's recruitment was a major coup for Shepherd, which lured him from Costain, where he had worked for 33 years.
A Shepherd spokeswoman said: "Stuart Fraser has left in mutual agreement with the company.
"The reason he has left was because of the lack of performance in his area of responsibility – London and the South-east."
Fraser, 53, confirmed that he left Shepherd in early January and added: "I'm surprised Shepherd has chosen to make a statement like this. I'm not going to enter into a debate about the reasons for my leaving." Fraser said he was more than happy to talk about the future.
"I've set up my own consultancy working on business strategy and the private finance initiative. I want to work to help the industry from outside a company, rather than from within."
Fraser said he has received a tremendous amount of support from contacts in the industry, and had already been offered PFI consultancy work.
Shepherd poached Fraser from Costain in October 1997, making him a main board director at the privately owned company.
The reason he has left was because of the lack of performance in his area of responsibility
His brief was to expand the group's influence in the lucrative London and South-east market.
At the time, Fraser said he believed there was plenty of opportunity for growth in
the South-east, but that Shepherd would not be chasing every enquiry that it received.
Fraser was one of the pioneers of the PFI, leading the Costain team that signed up the UK's first privately financed prison deal. He had been a Costain director since 1988, and had headed Costain's construction division for more than four years.
He has been replaced at Shepherd by Peter Mason, 42, who joined the company as a general foreman in 1980 after being assigned to work with it while still a student. He takes over in the southern region and has replaced Fraser on the company's main board.
He will also take over Fraser's brief of expanding Shepherd's London and South-east operations, which have a turnover of about £100m.
The spokeswoman said: "The changes have been made because of the need to strengthen our presence in the South-east. By bringing in Peter Mason, we have someone with nearly 20 years' experience with Shepherd."