What Is FTE?
When working on the budget and personnel resources for a project, you’ll likely come across the term FTE.
FTE stands for “full-time equivalent.” It refers to the number of hours worked by a single employee in a week. The annual FTE count is considered to be 2,080 hours, which breaks down into eight hours per day, five days a week. FTE is used to convert the hours worked by part-time employees into those worked by full-time employees. This is for ease of calculating the cost — in time, money, and personnel — of a project, since it standardizes the measurements.
For example, if you have one employee who worked 50 hours, one employee who worked 10 hours, and one employee who worked 40 hours on a project in a given week, that adds up to 100 total hours that week; assuming a full-time employee works 40 hours per week, your FTE is 2.5.
The FTE calculation is used in project management — and resource management, specifically — when staffing decisions need to be made. For example, if you have a construction project that is estimated to require 500 hours of work, you can determine your personnel requirements using the following FTE equation: 8 hours x (number of full-time employees) x (number of days worked) = 500 hours. If you then divide 500 by eight, this means the number of full-time employees needed to work full eight-hour days is 62.5:(number of full-time employees) x (number of days worked) = 500 hours/8 hours = 62.5
There are several ways to break down that 62.5, depending on your needs. You could choose to assign six full-time employees and one part-time employee to work on the project for 10 days. Or you could allocate work to 12 full-time and one part-time resource for five days. You can adjust and diversify the calculations based on the project’s scope and requirements, scaling up or down as necessary.
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